The act of franchising in business is as time old as business itself. Franchising simply put means selling an established company's reputation to a new company for the purpose of helping the new company to gain recognition in the particular business sector of the already reputable company. Tax preparation franchise therefore cannot be any different. This simply refers to a situation where a new person venturing into the business of tax preparation chooses to purchase the right to operate under the guise of an already established tax preparation company. This happens by the franchisee paying the agreed amount of money and signing contractual agreements that will govern their partnership with the franchising company.
What are the obligations of the franchisee to the franchiser?
Upon entering into such an arrangement, the franchisee must play by the franchising company's rules and regulations. To be exact, the franchisee will operate like a small branch of the main company by receiving orders and regulations from the franchising company. The only difference is that the franchisee will incur his/her running costs as well as advertising costs. The franchisee is also obligated to stick to specific areas as may be stipulated by the franchising company to avoid unnecessary competition for clients. Besides the already mentioned obligation, the franchisee will also be liable to pay the franchising company any royalties as may have been agreed on the contractual agreements between the two parties.
Advantage of tax preparation franchise
There is one major advantage that would drive a person towards going for a tax preparation franchise. That's the big reputation that may be achieved out of operating under the established company's name. since most business people prefer to deal with well established companies, franchising gives new companies the perception of might thus enabling them to transact business with companies that would have hitherto ignored them as too little or amateurish to serve them. The other advantage is the fact that the franchisee is likely to get his own area of jurisdiction thus giving him/her an automatic head start in so far as winning business in the said area is concerned.
The disadvantage of tax preparation franchising.
Other than the huge sums of money that the franchising company may charge, the franchisee may also experience several other disadvantages ranging from administrative constraints to restriction of business within a particular area regardless of any contrary feeling. By the franchising company assigning the franchisee an area within which to operate, the franchisee will be totally obligated to stick to that area even if there might be better business potentials else where.