What makes SBA franchises so successful?

Transcription

1 FRANCHISE

2 What makes SBA franchises so successful? We question the traditional methods and attitudes of the accounting profession, SBA seeks to provide a friendly one on one service, regular reports to clients through monthly processing of accounts, and at a cost which doesn t break the bank. Our shop front sites are designed to create brand awareness, and be inviting for prospective clients. THE SERVICES Small Business Accounting (NZ) Ltd (SBA) has developed a supportive accounting service for the self employed, partnerships and small limited companies. SBA challenges the traditional method of accounting services, provided by most Accountants. It considers year end only accounting as totally inappropriate in today s business environment. The SBA monthly service is designed to give clients on-going support, and to keep them informed (progressively) of their businesses profitability. It allows SBA to monitor the business on a regular basis, and to give advice at a time that it is pertinent. FRANCHISE LOCATIONS Sites have been established in high pedestrian traffic areas, to achieve maximum exposure. Market research clearly indicates that most existing accounting practices are not visible, and in addition seem reluctant to promote their locations. Our visibility is instrumental in accelerating client base growth for our franchisees, and it really works. We are keen to not only establish sites in the main centres, but in provincial towns, a branch in the smallest town serving a rural area may be viable. FINANCIAL OUTLAY Franchises are available throughout New Zealand for $38,000 +GST. This should not be seen as a cost, but as an investment, which should in time, increase many fold in value as your business grows. To fit out premises to the corporate standard required by SBA and the purchase of computers, software and furniture and fittings, etc., allow for a capital requirement of up to $15,000. There are only two fears that SBA franchisees suffer - on day one they worry that they won t have any clients; later, they worry that they will have too many. - Ramon Saavedra, SBA Onehunga. From as little as $90 per month, which is competitive with the traditional year end only providers, SBA processes the client's work monthly, providing for the client monthly profit summaries, calculates GST returns, produces a year end Profit and Loss statement, Balance Sheet, Depreciation Schedule; and prepares the client s tax return. The service appeals to small business persons, who are attracted by the regular contact with their accountant, appreciate the receipt of topical trading information and advice, and relieved at knowing that GST returns are prepared as part of the service. The monthly fee structure helps with budgeting. Through his own involvement in owning rental properties founder Warren Mills, has also developed SBA as a specialist in rental property accounting. Few accounting companies are promoting this aspect, and the identification of this market niche is proving very successful. The Company operates a payroll bureau service for it s clients. Investment opportunities are promoted to existing clients and passing public. Although our local area marketing plan is designed to generate instant awareness and to accelerate immediate client growth, allowance should be made however for some working capital in the first few months. As with all franchise systems, an on going royalty will be collected by the Franchisor, based on turnover, being 7.5%, reducing to 6.5% on achieving $250k turnover. In addition a contributory advertising levy is payable, being 2.0% of turn over. All major banks have finance available (60%) to approved franchise purchasers. TRAINING The Franchisor will give initial training at the company's Auckland Training Centre s. On going training will be via our help desk facility, and field visits. Subsequent training and support is provided indefinitely via our help desk. 1

3 FRANCHISEE ATTRIBUTES Although Franchisees do not need to be qualified academically, experience in NZ business/administration with some level of knowledge regarding GST, and elementary accounting functions is an advantage. He or she must have competent computer skills, be energetic, enthusiastic have excellent verbal communication skills, and be customer orientated. The Franchisee should be prepared to work with the Franchisor, to increase sales and profits and seek the challenge of developing the business and enjoying the rewards. SUMMARY It is our goal, through site exposure, TV advertising, marketing, brand awareness, and enthusiastic service, for SBA to be the automatic number one choice of small business. Franchisee Recruitment Policy We seek Franchisees who have sufficient bookkeeping/accounting experience to form a sound base for training in the SBA system. Academic qualifications while an advantage, are not a pre requisite, as full training is given to achieve an acceptable level of competence. While our site selection policy will automatically grow a client base, new Franchisees are expected to further grow their franchise by marketing SBA services to local businesses, via direct contact, and by networking to groups, and should posses the skills and attributes which would allow them to do this easily and effectively. Applicants should display above average computer skills. Franchisees are expected to be able to cope with some periodic work flow pressure. Prospective Franchisees should have, or be able to access sufficient capital to cover the initial fee, set up costs, and working capital for the first few months. If we had set up on our own we would not have had that strength to help us become established. - Ramon Saavedra, SBA Onehunga. What do I get for my Franchise Fee? The right to use the Franchisors intellectual property, and proven systems. Lead Generation from SBA s brand recognition, and National TV advertising. The opportunity to grow a profitable and valuable business. Comprehensive training and support. Induction training for two weeks, and then on going support from our NZ General Manager and our help desk On line Operational and Marketing manuals. Assistance with planning of opening promotions. 2

4 FAQ s Do I get an area allocated to me? We have non exclusive territories. Franchises are only established in populated areas that will sustain an SBA office. What sort of person does SBA small business accounting look for? The main attribute we look for is the determination to develop a successful business. We recruit accountants and non-accountants alike, and you do not necessarily need to have a finance background. General business acumen is important, and people skills are essential as the franchisee will be responsible for developing relationships with existing and prospective clients, as well as looking after staff needs. What financial assistance can I obtain if I need to? We have close contacts with all the major banks - just ask to speak to their Franchise Department and discuss the possibility of a loan towards the initial cost of the franchise, equipment etc. and an overdraft facility for working capital. Typically they will lend 60% of the value of the franchise start up costs. Can I talk to some of your existing franchisees? Yes you can- once you have been in for an interview we will give you access to the whole network, and we would encourage you to speak to at least 6 franchisees as part of your research. How can I be sure that you will do what you promise? Don t take it from us - speak to some of our existing franchisees. How much working capital will I need? You should reach break even in less than six months, and can begin to draw a wage thereafter. You will need sufficient capital to cover this period. How do I start looking for premises? Contact all real estate agents who deal in retail leasing. Check out your local paper. If you have chosen a specific area and are unable to locate vacant premises, visit or write to all of the shop owners in the vicinity. From our experience finding a suitable location is rarely a problem. Do you train me? Who pays for my training? Where do I go for training? Training is for up to two weeks the first week at our Auckland Training and Support Centre. If applicable, your travel and accommodation costs are at your expense. The second week is at your new premises. The travel, accommodation and reasonable expenses of your trainer are born by you. Is there an extra cost if I wish to bring my partner on the initial training course? Yes, no problem and at no addition cost. While subsequent training of your employees is your responsibility, we can carry out that training at Auckland for a fee....it also operates from retail premises - that makes it very approachable and attracts a lot of new clients. - Rita King, SBA Wanganui On what basis do you choose your franchisees how selective are you? We are highly selective because we do not want franchisees to join us who are not going to be successful. We look for ambitious, disciplined and capable people with a positive outlook and who are happy, pleasant individuals. Who will be my link with you after I have opened the business? Our General Manager is always available for ongoing assistance either directly or by . How much IT knowledge do I need to have? We will only accept business owners who have a good degree of knowledge and experience in using a PC. This is due to the fact that a large part of the work involved is software driven. Do you provide instruction and operational manuals? Yes our manuals are available via our intranet base. We also have a knowledge data base, basically an A-Z on accounting and tax, and includes frequently asked questions. What can I sell and what can I not sell? You will be trained on various aspects relating to accounts; tax returns completion, book keeping etc and you can offer these services to your clients. The normal procedure is to act initially for our core customers and then at a later date to move on to acting for larger clients, once you have developed a sound experience base. In addition, we also encourage our franchisees to write mortgages through our license agreement with Adam Parore Mortgages. 3

5 How much net profit can I earn from my operation? This is really down to you but we want you to build up your turnover and profits consistently, aiming for an achievable turnover of $240,000 + after 3 years. We expect a third of your turnover to cover the costs of running your franchise, with a third payable for your staff, leaving you with a third of your turnover as net profit. Do you have any minimum performance targets? Only sensible ones. If you do not achieve annual sales of $40000 in year 1, and an additional $40000 in subsequent years, then you are not operating our franchise effectively. These figures are our minimums, and by keeping to the business model you should comfortably exceed these levels of growth. We ve been so busy I ve put in more hours than I anticipated, and now I am expanding by bringing my wife on board. - Dave Fifield, SBA Papanui Is the business seasonal? No. We are covered by Inland Revenue s extension of time facility which allows us until 31 March each year to submit all client tax returns progressive % targets are applied by IRD throughout the year. What fees do I charge? We give you guidance on the level of fees that you should charge your clients but the final decision on the exact amount is up to you. How do I find my clients? Your visible retail shop presence should grow your client base by 50%. National TV advertising has proven very successful in generating new business and to supplement this local area advertising also works well. We cannot emphasize enough the importance of networking in your local area and the benefits this will bring to your business. Our most successful franchisees are those that approach this area with confidence and enthusiasm, appointing staff in a timely fashion and focusing on Business Development. What hours do I need to work; do I spend all my time completing client accounts and tax returns? You should be prepared to work normal office hours (typically Monday to Friday inclusive, 9am to 5pm plus an occasional early evening or weekend appointment). In your first few months, you should never spend more than half of your time on client accountancy affairs, as you need the balance of your time for marketing and development of your business, and office administration. What advertising and promotional expenditure do you incur and do we have to contribute to it? There is a National Advertising/Brand Awareness fund into which you pay at the rate of 2% of your turn over. This fund is used to promote the brand on a national basis including high profile TV advertising. You are responsible for your own local advertising and are contractually obliged to spend a nominated minimum amount during the period March to June. 4

6 What IT hardware and software do I need? And what do you supply? You need to supply your own PC complete with Microsoft operational software. All franchisees will then require APS, BankLink, Acclipse, plus Ace Payroll software. I perceive that it will be too expensive to go into shop front premises in my area. Is it absolutely necessary for me to make this move? Yes it is! This is the way we will build a strong brand throughout the whole of NZ and it is integral to our business model. In certain circumstances franchisees may start from home or office for a limited period. Does this contract permit me to sell my business? Yes, you are able to sell your business at any time. Often other franchisees express an interest or you are free to sell the business to a 3rd party subject to Franchisor approval of the purchaser. What restrictions might affect my rights to sell the business? Having assessed the value of your business, you must offer it to us in the first instance. Assuming we do not purchase your business you have the right to sell it to any other third party. You must sell your business as a going concern. The marketing training that I received was particularly helpful. This was one aspect of business that I really knew very little about, but I ve had continuous support in this area and it really worked. - Rob Lowe, SBA Kilbirnie May I have a copy of your Franchise Agreement? Yes, we will be pleased to give you a copy of the draft agreement following your interview. After the deposit paid, $5k to secure area, gets you a franchise agreement and access to the other sites for due diligence. For how long is the franchise granted? The term of the Franchise Agreement is 10 years but this is renewable by you every 10 years. In most cases we anticipate franchisees will renew the agreement to continue the franchise every 10 years until they sell it at some future date. Are there any returns that I need to submit? Yes, franchisees must submit a monthly activity report to the Franchisor no later than the fifth working day of the following month, which gives details of client enquiries and sign ups, and revenue information for the last completed month. A royalty fee of 7.5% is applied to your turn over, reducing to 6.5% when annual turn over reaches $ In addition, franchisees are required to submit copies of their own annual accounts no later than 30 June annually. What systems do you have for keeping franchisees in touch with yourselves and each other? Do you hold seminars? We have Regional Meetings and a National Conference once a year to discuss sharing of best practice, up-skilling, and to update the network on planned developments for the coming year. We also hold conference telephone calls regularly covering a range of topics. What if I already have clients before becoming an SBA franchisee? We have taken on some accountants who already have a block of clients of their own acquired during the period before they joined us. Also, some of our existing franchisees have acquired blocks of fees from retiring accountants. In both these cases we have been asked to consider whether some relief can be given against charging our normal rates of royalty. Our policy for both these scenarios is subject to a minimum annual fee base of $15000, we will allow the fees introduced or acquired to be kept in a separate pool and for two years we will accept royalties at the rate of 3.25% on these fees. After two years these fees will be subject to full royalties. 5

7 TESTIMONIALS SBA Papanui Franchisee Dave Fifield says The system is sound and that makes it very easy to operate. Although I had a good understanding of accounts before I started, the two weeks training was invaluable. We ve been so busy I ve put in more hours than I anticipated, and now I am expanding by bringing my wife on board. We are still growing, which is wonderful for us, and simply proves the concept is as good as everyone says. Site Selection Criteria LOCALITY Absolute visibility is essential. A street level shop front in a busy foot traffic area, near banks, a post office, near the entrance to a shopping centre, or similar busy public area. I could be working in a huge accounting firm, but actually I just enjoy the personal touch and the lifestyle that SBA has given me Lisa Holten, SBA Pukekohe NZ is made up of many small companies so I always knew there was great potential and we wanted to buy a business for growth. SBA offered that opportunity, plus the backing of a well-established brand. If we had set up on our own we would not have had that strength to help us become established - Ramon Saavedra, SBA Onehunga. And Ramon again There are only two fears that s.b.a franchisees suffer on day one they worry that they won t have any clients; later, they worry that they will have too many. We opened two outlets in four years, and we have the growth to prove just how good the business model is Wanganui Franchisee Rita King says I was attracted to SBA because, in addition to offering a vital service, it also operates from retail premises that makes it very approachable and attracts a lot of new clients. I was also drawn to the concept of franchising by the idea of support. I think that I phoned ever SBA outlet in the country and I heard not a single negative about the system or the network The marketing training that I received was particularly helpful. This was one aspect of business that I really knew very little about, but I ve had continuous support in this area and it really worked. - Rob Lowe, SBA Kilbirnie TYPE Ex retail premises SIZE 50 to 60 square metres, although smaller or larger should not be discounted. SELECTION APPROVAL Although the selection of a site is the responsibility of the Franchisee, subject to the approval of the Franchisor, it is recommended that the Franchisor or his representative be involved early in the selection process. AVERAGE SETTING UP COSTS ( A guide only ) The total cost varies considerably from site to site, being influenced by such things as, size, the personal furniture and equipment being supplied by the Franchisee, the Franchisees desire to outfit to a higher standard, the desire of the Franchisee to outfit with growth in mind, and possible financial assistance by a supportive landlord. On average you can expect to spend approximately $15,000 on a fit out. Phone I Fax I enquiries@sba.co.nz I Web Small Business Accounting (NZ) Limited I 24b Spring Street I Freemans Bay PO Box , Ponsonby 1144 I Auckland I New Zealand