Q&A for Accountants interested in joining the abacus Accountancy Network
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Q&A for Accountants interested in joining the abacus Accountancy Network Document Transcript

  • 1. abacus Franchising Company Limited Frequently Asked Questions and Answers
  • 2. abacus Franchising Company Limited Contents Who can purchase a franchise and what attributes are abacus looking for? 5 As a qualified accountant do I require a practicing certificate? 5 As an accountant in practice I must also have a professional services agreement. Does abacus have anything in place for this? 6 How selective is abacus on choosing franchisees? 6 What is the USP of abacus? 7 Is abacus a member of the British Franchise Association? 7 Can I have a copy of your franchise agreement? 7 Do you advise me to take independent professional advice before purchasing a franchise? 7 Can I speak to some of your existing franchisees? 8 Is there anybody else we can contact? 8 What is the Franchise Fee and how do you justify the fee? 8 What does the franchisee receive for the purchase price? 8 Why do you form each franchise as a limited company? 9 Can I choose my company name? 9 As I am sole director do I require a company secretary? 10 Can my spouse be a director and/or a shareholder? 10 Where will my registered office be? 10 When will my year-end be? 10 On what basis were the territories created and who did this? 10 What do you mean by exclusive territory? 11 Is it possible that an existing franchisee may have clients in my chosen territory? 11 The franchise licence is for 5 years. What happens at the end of 5 years? 11 How much is the licence fee? 11 What if I don’t want to renew the franchise after 5 years but wish to carry on trading? 12 What if I want to sell the practice after 5 years? What restrictions are there? 12 What happens if, due to ill health, I am unable to look after the practice? 12 What happens if I die during the 5 years? 12 What if I decide that I have made a mistake and wish to terminate the agreement? 13 Has anybody terminated an agreement and why? 13 Why do I need a Consumer Credit Licence? 13 Why do I need to register with the data protection registrar? 13 Page 2 of 31
  • 3. In my second year do I have to use the same insurance provider for my Professional Indemnity Insurance? 13 In my second year do I have to use the same insurance provider for my Employers Liability Insurance? 14 Why do you use Nat West bank and is it compulsory for franchisees to use Nat West? 14 Why do you register the franchisee’s Company for VAT immediately? Doesn’t this position us at a disadvantage with our clients and competitors? 14 Exactly how much point of sale and promotional literature do we receive? 15 Can we order additional stationery and brochures or do we have to find our own printers? 15 What type of binding machine do you supply and how many binding coils do we get? 15 Is the 0844 telephone number one where clients would have to pay extra to call me and why do I need it? 15 I already have an email address can I use this for the business? 16 What is the abacus intranet? 16 Are the help lines in VAT and Tax free to use? 16 What manuals does abacus provide? 17 If I leave the franchise do I have to return the manuals? 18 What is on the CD? 18 What is the content of the Induction course and how long is the course? 18 Do I have to sign up for the Franchise before coming on an Induction Course? 19 Where are the induction courses held and will I need to organise a hotel? 19 How often are Induction Courses held? 19 How many candidates do you have on a course? 19 If I am interested in coming on an induction course how do I reserve a territory? 19 Will I be expected to pay for the franchise at the end of the induction course? 20 Do I wait until I have been on the induction course to organise funds to pay for the franchise? 20 Do you provide assistance in obtaining a loan? 20 How much working capital do I require? 22 Do I wait until I am ready to start a franchise before coming on an induction course? 22 How can I find out which territories are available? 22 Who installs the software? 23 What support do we get from CCH? 23 As I grow my practice can I increase my user licences on the CCH and Sage products? 23 Page 3 of 31
  • 4. Do I get any training material from CCH? 23 Is there a list of ancillary service providers? 23 Can I use my own associate partners? 24 Do I get commission if any of my clients use the alliance partners? 24 Who do I contact at Head Office to organise one of the alliance partners to meet my client? 24 What IT equipment do I require? 24 Does abacus have anyone who could advise me to ensure my PC meets your specification? 25 Do you have any minimum performance targets? 25 What happens if I don’t meet the performance targets? 25 Do I need to open an office as soon as I commence trading as an abacus Franchisee? 26 What are the management/royalty fees and when do they have to be paid? 26 Are there any other costs other than management fees? 28 How do I find my clients? 28 Do you confirm and verify the appointments generated by the Call Centre? 28 Do you contact the potential client after the franchisee has been on the appointment? 29 Can I continue to use the Call Centre after receiving my initial 100 appointments? 29 How are the Call Centre bands broken down? 29 What fees do I charge clients? 29 Do franchisees have to prepare monthly returns to Head Office and why? 29 What ongoing help will I get and from whom? 30 Is the business seasonal? 30 What hours will I be expected to work? 30 Do I have to pay for my own local advertising? 30 What happens if I already have clients? 31 Why are there 3 parties to the franchise agreement? Who is the guarantor? 31 Now I have looked at the presentation on the CD read these questions and answers, what do I do next? 31 Page 4 of 31
  • 5. abacus Franchising Company Limited Frequently Asked Questions Who can purchase a franchise and what attributes are abacus looking for? Only qualified accountants can purchase a franchise. Our philosophy is to provide our clients with a value for money service and we believe this can only be achieved by recruiting experienced accountants. The bodies recognised by abacus are: - Institute of Chartered Accountants in England and Wales Institute of Chartered Accountants in Scotland Institute of Chartered Accountants in Ireland Chartered Institute of Management Accountants The Chartered Association of Certified Accountants The Chartered Institute of Public Finance and Accountancy The Institute of Financial Accountants Communication skills are essential to enable the franchisee to develop strong working relationships with their clients. We are also looking for accountants with general business acumen and the ability to “look outside the box”. Most importantly a candidate must be self-motivated and determined to build a successful practice. As a qualified accountant do I require a practicing certificate? This varies dependent upon which accountancy body you are a member of. ICAEW Yes you must have a practising certificate. The 2010 fee is £259 and the application process takes about 21 days. For more information you can contact the ICAEW on 01908 248028 or email postqual@icaew.co.uk The ICAEW web site address is www.icaew.co.uk and an application form can be downloaded from www.icaew.com/index.cfm?route=118395 ICAS Yes you require a practicing certificate. Unfortunately the information is not available on their website. You have to contact the membership department on telephone number 0131 347 0100. ICAI Yes you require a practicing certificate. Unfortunately the information is not available on their website. You have to contact June Harrison on telephone number 02890 231541. Page 5 of 31
  • 6. CIMA You must initially register as a member in practice. You can contact CIMA on 020 8849 225 or email cima.contact@cimaglobal.com . Guidelines for members wishing to register as a member in Practice can be found at the link below. The cost in 2010 to register as a member in practice is £65. http://www2.cimaglobal.com/cps/rde/xchg/SID-0A82C289-C089A14E/live/root.xsl/12977.htm After a year in practice you will then be able to apply for a practicing certificate. The CIMA website address is www.cimaglobal.com and the guidelines for application can be found at the link below. http://www2.cimaglobal.com/cps/rde/xchg/SID-0A82C289-A2D301EA/live/root.xsl/12954.htm The Members in Practice application form for 2010 can be found at the link below http://www2.cimaglobal.com/cps/rde/xbcr/SID-0A82C289-A2D301EA/live/MIP_Practicing_2008_FINAL(1).pdf ACCA Yes you require a practicing certificate. The 2010 cost is £300.00. It is a full practicing certificate that you will require. The web site address for the forms and information on your application is www.accaglobal.com/members/professionalstandards/prac_info/forms CIPFA No practicing certificate is required. IFA Yes you require a practicing certificate but unfortunately the application form is not available on their website. You must contact the membership department on 01732 458080 and they will post an application form to you. As an accountant in practice I must also have a professional services agreement. Does abacus have anything in place for this? Yes our solicitors have drafted a comprehensive agreement. You will find this in the practice manual and also on the CD of useful letters and checklists, which you receive when, you purchase a franchise. The agreement is between you and another qualified accountant who will look after your clients if you fall ill etc. As we have a number of accountants at Head Office we can sign the agreement with you so that we will look after your clients if you are ill or incapacitated. How selective is abacus on choosing franchisees? It is vital to the future success of abacus and all its franchisees that we are extremely selective as to who can purchase a franchise. Page 6 of 31
  • 7. What is the USP of abacus? There are a number of USP’s to the abacus franchise but two of the key ones are as follows: - 1. For any accountant starting their own practice the biggest issue is “where am I going to get my clients from”? One of the biggest advantages we have over other franchise opportunities is we do not generate leads for our franchisees we provide them with 100 confirmed and verified appointments in their first year of trading from bands A – D. Because all our appointments are confirmed and verified we have an average conversion rate of 40% across all our existing franchisees. 2. We at abacus believe that our clients require far more from their accountant than a set of accounts and a tax return. We expect all our franchisees to be proactive and look at ways in which they can help the client develop their business. Our USP is therefore our national network of alliance partners that can provide your clients (no matter how big or small) with all the administrative support they require. These services cover Pensions, Mortgages, Insurance, Health and Safety, HR, IT Services, Expense Reduction Analysts, Quality Assurance, Telecoms and much more. Is abacus a member of the British Franchise Association? We were accepted as an Associate Member of the BFA on 8 th November 2006. We are currently in discussion with the BFA in regards to Affiliate Membership. Affiliates to the BFA are specialist advisors approved by the BFA to help both Franchisors and Franchisees. As a national network of qualified accountants and members of the BFA we feel we are ideally placed to fulfil this role. Our contact at the BFA is Catherine Jackson (01491 578050) Can I have a copy of your franchise agreement? Yes, a copy will be given to you when you attend one of our “Get to Know Us Seminars” held at our head office. Do you advise me to take independent professional advice before purchasing a franchise? Yes. We believe it is in the best interest of both parties that you fully understand and are comfortable with the agreement before signing it. Page 7 of 31
  • 8. If you or your advisors have any issues with the agreement we are more than happy to discuss them with you. You can also contact the BFA solicitors for advice. Their contact number is 01491 578050. Can I speak to some of your existing franchisees? Yes, after attending a “Get to Know Us” seminar we will organise 2 or 3 of our existing franchisees to contact you. We will try and organise it so that you speak to franchisees at different levels of development and wherever possible a franchisee local to your region. Is there anybody else we can contact? Yes you can contact the BFA’s accreditation manager, Catherine Jackson, on 01491 578050. What is the Franchise Fee and how do you justify the fee? The franchisee fee is currently £26,000 payable before commencement of the franchise. To obtain membership to the BFA we have to provide them with a breakdown of the complete fee. We make no profit from the initial fee our profit is generated from the management fees and commissions generated from the use of the alliance partners. What does the franchisee receive for the purchase price? We provide the franchisee with the following: - 1 Off the shelf limited company with the franchisee as director and sole shareholder. 2 An exclusive territory. 3 5-year franchise licence allowing you to trade as abacus. 4 Consumer Credit Licence. 5 Data Protection Registration. 6 Professional Indemnity Insurance. 7 Employers Liability Insurance. 8 Nat West Business Bank Account. 9 VAT Registration. 10 Practice stationery including Letterheads, Business Cards, Continuation Sheets, 4 Types of Branded Envelopes and Branded Accounts Front and Back Covers. 11 Binding machine and metal spines. 12 Installation of a business telephone line and allocation of one of our 0844 numbers. (However, it is the franchisees responsibility to provide the telephone and pay the line rental and call charges). 13 50 sets of company brochures. 14 Email address i.e. jim.smith@abacusnetwork.co.uk 15 Your own abacus web site. 16 CRM system attached to your website. 17 Access to the abacus Group Blog and Face book page. Page 8 of 31
  • 9. 18 Your own abacus Twitter account. 19 Online quotation system. 20 Access to the abacus intranet. 21 Technical help lines in VAT and Taxation. 22 Manuals in Accounting, Taxation, HR Procedures, Marketing and Practice Management. 23 CD with standard letters, forms, checklists, tax tables and adverts. 24 One week in house induction course at the Head Office. 25 Sage line 50 – 50 Companies. 26 CCH Practice Management software – 150 clients (see pdf file attached) incorporating: - CCH ProSystem Console CCH ProSystem Client Database CCH ProSystem Time and Fees CCH ProSystem Document Management CCH ProSystem CRM CCH ProSystem Diaries and Resource Planning 27 CCH Accounts Production – 150 clients (see pdf file attached) 28 CCH Personal and Partnership Tax– 150 Clients (see pdf file attached) 29 CCH Corporation Tax – 150 Clients (see pdf file attached) 30 Subscription to KashFlow online bookkeeping program for more information click on the link below http://www.partners.kashflow.co.uk/ 31 abacus In-house Incorporation software 32 Head office support. 33 Access to all our other specialist admin alliance partners. 34 Data for 10,000 businesses from Yell Experian for your territory. 35 Most importantly, 100 confirmed and verified appointments in your first year of trading in bands A to D. Why do you form each franchise as a limited company? Despite recent changes by the government a limited company is still the most tax efficient vehicle for the franchisees to trade through. On the induction course we discuss in detail the tax benefits of a limited company compared to sole traderships and partnerships. Can I choose my company name? No. The intention is for all our franchisees to trade as abacus as we are trying to develop a national brand that will be instantly recognisable in the accountancy market place. This can only be achieved if all our franchisees trade as abacus. All our territories are numbered so your limited company will be called, for example, abacus 123 Limited but your trading name will simply be abacus. Page 9 of 31
  • 10. As I am sole director do I require a company secretary? No recent, changes in the Companies Act 2006 allow sole director companies to function without an appointed Company Secretary. However, if you wish to appoint a Company Secretary then initially for ease of setting up the business one of the abacus Head Office finance team will be the Company Secretary. Once everything is in place if you wish to change the company secretary to be your spouse, other relative or friend it is entirely up to you. If you wish we are more than happy to remain as your company secretary. Can my spouse be a director and/or a shareholder? Yes, once the company is formed you can add whomever you wish as a director and shareholder. All we ask is two things. One that you inform us of the changes you are making and two, you make them aware that they must abide by the franchise agreement. Where will my registered office be? When we incorporate the company we use the Head Office as the registered office of the company. However, as with the company secretary, once everything is set up you can transfer the registered office of the business to your home or office address. Most of our franchisees have started their business from home and have left the registered office of the business as the Head Office address rather than use their home address. They move the registered office address when they move into their own office. When will my year-end be? When incorporating the limited company we set the year-end to the 31st March, which ties in with the Inland Revenue tax year-end for limited companies. This means that your first period end maybe shorter than one year. I must stress the year end date has no barring on the life of the franchise. The franchise is for five years irrespective of the year end date. On what basis were the territories created and who did this? From the inception of our franchise we have carried out everything with the view of satisfying the criteria of the British Franchise Association. We therefore used a company called Overview Mapping Limited, an approved information provider of the BFA, to divide the UK into equal territories using the criteria of the number of SMEs with employees of 1 to 75 and with a turnover of up to the audit threshold. Page 10 of 31
  • 11. Each territory has approximately 10,000 businesses in it that meets the above criteria. Therefore the size of a territory will vary depending on where it is in the UK. For example, territories in London are quite small whereas a territory in Northumberland is huge. The important point is that irrespective of which territory you choose there will be equal opportunity to develop an accountancy practice. What do you mean by exclusive territory? Quite simply we will not generate any appointments in a territory for anyone other than the franchisee who purchases that territory. Even if a neighbouring territory to an existing franchisee is vacant we will not generate an appointment for him/her in that territory. Therefore when you purchase an abacus franchise you can be assured that all the data for that area is workable data. Is it possible that an existing franchisee may have clients in my chosen territory? Yes, through referrals it may happen that a franchisee in a neighbouring territory has a client in your territory. For example, if a franchisee has a client and that client has a relative who also owns a business, it is not unrealistic for the franchisee to be referred by his client to his relative, if they were looking for a new accountant. The relatives business may be outside our franchisee’s territory but it would be naive of abacus to say to the franchisee that he/she can’t take on that client. What we as the franchisor do is monitor the client base of our franchisees from the monthly returns they submit, which lists their clients. By doing this we can ensure that this situation does not happen on a regular basis. Furthermore the franchise agreement does say a franchisee cannot directly solicit for business in any other territory other than the one he/she has purchased. The franchise licence is for 5 years. What happens at the end of 5 years? The franchise can be renewed for a further 5 years. The cost to do this is £1,000. This fee is to cover the legal costs of drafting a new franchise agreement and the licence fee for a further 5 years. How much is the licence fee? The licence fee is £500. This is included in the original purchase price and is part of the £1,000 renewal fee. Page 11 of 31
  • 12. What if I don’t want to renew the franchise after 5 years but wish to carry on trading? There is no obligation to renew the franchise, however, you could no longer trade as abacus and would therefore have to change your company name. You would no longer have access to the help lines or the ancillary services. You would also have to change your phone number as the 0844 number belongs to head office. We would also be able to sell the territory to another accountant who would be a competitor to you. What if I want to sell the practice after 5 years? What restrictions are there? If you wish to sell the practice, as an abacus franchise the person purchasing the business must pay the renewal fee to abacus Franchising Company and agree to the terms set out in the franchise agreement. Obviously as part of the renewal process we would vet the potential buyer and we would always have the right not to renew if we thought he/she was not a suitable franchisee. If you wish to sell the practice without renewing the franchise agreement the same rules apply as if you had not renewed. I.e. The new owner must change the company name and return the 0844-phone number. Again we would have the right to sell that territory to another accountant who would become a competitor to the new owner. What happens if, due to ill health, I am unable to look after the practice? If you are unable to look after the practice due to ill health then as franchisor we would appoint a manager to run the practice on your behalf until you were well enough to return to work or, if a more permanent illness, until a buyer for the practice can be sought. The franchisee, through the practice, must pay the manager a salary and cover all expenses incurred by the manager. The proceeds of the sale will of course go to the franchisee. What happens if I die during the 5 years? As with the ill health situation we will appoint a manager to run the practice until a purchaser can be sought. The proceeds now however will go to the franchisee’s estate. Page 12 of 31
  • 13. What if I decide that I have made a mistake and wish to terminate the agreement? If this situation arises where you feel you have made a mistake you do have the right to terminate, however, the franchisor is under no obligation to refund the franchisee any part of the franchise fee. Also as franchisor we have the option if deemed appropriate to claim specific liquidated damages, as set out in the franchise agreement, from the franchisee for early termination of the agreement. In the case of termination due to death or incapacity the franchisor would not claim liquidated damages against the franchisee or the franchisees estate. If deemed appropriate we may purchase any capital assets off the franchisee necessary to maintain a quality service to the clients of the business. It is therefore very important that you fully consider the proposition before purchasing a franchise. Has anybody terminated an agreement and why? Only a very small proportion of candidates have terminated an agreement and in each case they admitted it was due to their own failings and not down to the service provided by abacus. Why do I need a Consumer Credit Licence? Our network of alliance partners creates opportunities for our franchisees to help their clients’ business by introducing other administrative services. Some of these services such as financial services and insurance require you to have a consumer credit licence. A copy of the application form is included in your statutory books. The licence is a five year licence. Why do I need to register with the data protection registrar? The nature of the business we are in as accountants mean we have access to clients’ employees’ data, suppliers’ names and address and customer details. Protection of this data falls under the Data Protection Legislation and therefore we are required to be registered. The current renewal fee you will have to pay in year 2 is £35. In my second year do I have to use the same insurance provider for my Professional Indemnity Insurance? No you can use any insurance provider you like. If you don’t renew with the same provider however you must provide us with a copy of your insurance so that we, as the franchisor, know that you are covered. Page 13 of 31
  • 14. I must point out that our insurance broker has negotiated a very competitive price for professional indemnity insurance on the basis that they are insuring a number of franchisees. If you obtain a cheaper quote then I suggest you check the policy before purchasing it as it may have inferior levels of cover. In my second year do I have to use the same insurance provider for my Employers Liability Insurance? No you can use any insurance provider you like. If you don’t renew with the same provider however you must provide us with a copy of your insurance so that we, as the franchisor, know that you covered. I must point out that our insurance broker has negotiated a very competitive price for employer’s liability insurance on the basis that they are insuring a number of franchisees. If you obtain a cheaper quote then I suggest you check the policy before purchasing it as it may have inferior levels of cover. Why do you use Nat West bank and is it compulsory for franchisees to use Nat West? First we would like to point out that abacus Franchising Company Limited does not receive any introducer’s fee or commission from Nat West Bank just because the franchisees bank with Nat West. When we incorporated our business Nat West was most helpful. Mark Scott, Nat West’s head of franchising, is also a board member of the BFA and was therefore able to advise us on the structure and content of our franchise. By all the franchisees banking with Nat West it will give abacus some bargaining power with the bank when discussing services provided, bank charges etc, as the bank wouldn’t want to lose a large number of accountancy businesses who are likely to be introducers to the bank. The more franchisees we sign up the stronger our bargaining position becomes. That said we understand that some candidates may have loyalties to another bank and do not wish to bank with Nat West. If this is the case please inform us at Head Office when discussing the franchise. Why do you register the franchisee’s Company for VAT immediately? Doesn’t this position us at a disadvantage with our clients and competitors? abacus Franchising Company is VAT registered and therefore must charge the franchisee VAT on the sale of the franchise. By registering the franchisee’s company for VAT they are able to reclaim the VAT of £4,550.00 from HM Customs and Excise at the end of their first quarter. In the first year of trading we generate 100 confirmed and verified appointments for franchisees out of bands A to D. These bands are based on turnover and the lowest Page 14 of 31
  • 15. band starts at the VAT threshold. Therefore all the companies you have appointments with are VAT registered so the fact that you are registered for VAT is not an issue. Your main competition is the small and medium accountancy practices and very few of these will have sales below the VAT threshold of £70,000 a year so they will also be charging their clients VAT. Exactly how much point of sale and promotional literature do we receive? Schedule 4 of the franchise agreement lists all the initial material supplied. This is as follows: - 500 Letterheads 500 Business cards 500 Continuation sheets 250 DL Envelopes with windows 250 DL Envelopes without windows 100 C4 Envelopes with windows 100 C4 Envelopes without windows 50 Presentation/Accounts front covers 50 Presentation/Accounts back covers 50 Brochures Can we order additional stationery and brochures or do we have to find our own printers? Yes you can order additional items through the online stationers on both your and our websites. The online stationer is Whitehill Publishing and all your templates for letter head, business cards etc are all set up for you once you purchase the franchise. We do not allow franchisees to use their own printers as we must control the quality and colour of the brand logos for the benefit of all franchisees. What type of binding machine do you supply and how many binding coils do we get? We supply you with a Rexel Office Wire Binding Machine model number WB606 Flowline Pro Compact. We also supply 100 x 5mm white wire-binding elements. As with stationery you can order additional wire binders from Head Office. Is the 0844 telephone number one where clients would have to pay extra to call me and why do I need it? No the number is just a national number with normal local and national call rates. Many of our franchisees commence running their practice from home. We have therefore provided them with an additional phone line so that their home telephone is not affected. Page 15 of 31
  • 16. Also when they do move into an office they simply take the business number with them. I already have an email address can I use this for the business? No. Again it is all about building brand awareness so therefore we all use the same email address. What is the abacus intranet? The abacus intranet is a secure password protected private area of the abacus website. On the intranet is your personal calendar, which can only be viewed by yourself and the call centre staff. There is also a general area within the intranet that can be seen by Head Office and all franchisees. In this area you will find the following: - Forum This is a self help section where you can post questions and other franchisees will post the appropriate answers. Franchisee Details A list of all franchisee names and addresses Manuals Copies of the 5 abacus manuals Standard Letters All standard letters and forms in the manuals can be found on the intranet. Tax Tables Current and previous year's tax tables Links to Websites Useful links to other websites such as Inland Revenue and Companies House. Alliance Partners Information about our other service providers Newsletters Back copies of franchisees newsletters As part of the induction course Paul Herring, our IT manager, takes you through the procedure for using the Intranet and email system. Are the help lines in VAT and Tax free to use? Up to a point. For straightforward queries that can be answered within the hour the help lines are free. If, however, the query is more complex and will take more than an hour to resolve then the advisors will ring you back with a quote for the work. Generally in these situations it is in your client’s interest to pay for the specialist advice as it often generates tax savings. Page 16 of 31
  • 17. What manuals does abacus provide? We go through the content of the manuals on the Induction course. An overview of the manuals is as follows: - Accountancy Manual The manual contains an overview of the cycle of a client from new client to accounts preparation and sign off. There are standard letters to be used for a number of tasks including professional clearance, year-end planning and accounts filing. There are a number of checklists covering areas such as accounts preparation, client meeting agenda and accounts completion. There are also pro-forma accounts layouts for various types of businesses such as dormant companies, sole traders, partnerships and limited companies. Taxation Manual This manual is broken down into two main sections personal taxation and corporation tax. Each of the two main sections has a number of subsections, which cover topics such as: - - How to prioritise clients - Tax year calendar - Letters of Engagement - Checklists - Tax Rates - Copies of forms. Practice Manual The practice manual starts by looking at the theory of running your own business and running a practice. It then moves on to cover the practical issues you will incur such as letters of engagement, forms required by the Inland Revenue, how to incorporate a limited company and so on. We also have standard consultancy agreements for sole traders, partnerships and limited companies. Again the manual has numerous standard letters and forms and a number of procedures such as a money laundering. HR Manual All our HR procedures have been approved by ACAS. There is a comprehensive list of procedures in the manual supplemented by the appropriate forms. The manual also includes a standard service agreement. Page 17 of 31
  • 18. Marketing Manual The marketing manual takes you through the stages of marketing and explains how to communicate your message. We also have a separate section on PR. The final section covers advertising and includes numerous abacus-advertising styles that can be used by franchisees. These layouts range from a small black and white two-column ad to a full A4 colour page ad. If I leave the franchise do I have to return the manuals? Yes, the manuals must be returned as they are effectively on loan to a franchisee until they leave the network. What is on the CD? The entire manuals listed above are on the CD. Then as Microsoft Word documents you will find all the standard letters, forms, contracts, check lists, etc. Also on the CD are the pdf and quark file required by papers and magazines for advertisements. We also have all the tax tables on the CD so that you will always have them at hand when visiting clients. What is the content of the Induction course and how long is the course? The course is five days long. It commences on Monday morning at 9.30am and ends early afternoon on the Friday. The course is structured to take you through the life cycle of generating clients, looking after those clients, and then generating more. Monday Sessions include Call Centre Intranet Practice Management Financial Services Banking Tuesday The whole of Tuesday is dedicated to Sales and Selling including role play sessions in the afternoon Wednesday This is the first of two days of “hands on” CCH software training. Wednesday is dedicated to client manager and accounts production Page 18 of 31
  • 19. Thursday The accounts produced on Wednesday are now used to prepare and file a tax return using CCH software. Friday The final session is marketing. We look at marketing in general and how to relate that to your practice Do I have to sign up for the Franchise before coming on an Induction Course? No unlike many franchises we don’t expect you to purchase the franchise until after you have been on the Induction Course. However, if you wish to start your practice before the next available induction course you can purchase the franchise and then come on the course. The cost of the Induction Course is £1,250.00 plus VAT. If you decide not to purchase a franchise after the course then the course fee is non refundable. If however you do purchase the franchise then the cost of the induction course comes off the franchise fee. I.e. the balance due to abacus for the franchise is £26,000 - £1,250 = £24,750.00 plus VAT. We hold our signing ceremony on the Friday of the induction course after the marketing session. Where are the induction courses held and will I need to organise a hotel? All our induction courses are held at the Head Office in Sunderland. This gives you the opportunity to meet other members of staff and see the Call Centre in operation. As part of the Induction Course fee we organise and pay for your hotel for the week. How often are Induction Courses held? Currently we hold induction courses on a quarterly basis March, June, September and November. The course is normally the second week in the month. How many candidates do you have on a course? We will have a minimum of 2 candidates on a course with a maximum of 6. If I am interested in coming on an induction course how do I reserve a territory? The only fair way to allocate territories is on a first come first served basis. The only way you can therefore reserve a territory is to pay for the Induction course. At this point we will reserve the territory of your choice (provided it hasn’t already been sold) even if the course you are coming on is not for a few months. Page 19 of 31
  • 20. For example, in October you decide you would like to come on an induction course but because of existing commitments you are not able to attend a course until March. Provided you pay the course fee and tell us which territory you would like to purchase then that territory is reserved for you until you have been on the March course. Even if later in October somebody who can come on November’s course wishes to purchase the same territory it will remain reserved for you. Will I be expected to pay for the franchise at the end of the induction course? This would be great if you could but realistically we understand it may take a couple of weeks to draw down any loan you may have organised before coming on the course. Ideally if you come on Novembers course (second week of the month) we would expect you to be able to pay by the end of November. We will not commit to purchasing data, software and so on until you have paid so the sooner you pay the more quickly we can have you up and running. Do I wait until I have been on the induction course to organise funds to pay for the franchise? No, this will only delay the start of your new business. As I am sure you appreciate we cannot incur expenditure forming a company buying data and so on until you have paid for the franchise. It is therefore far more advantageous to talk to the lender before you come on the course. Ideally you need to know that the loan has been approved in principal before attending the course. If after being on the course you decide not to purchase the franchise you will not incur any charges for having the loan agreed in principal. It is only if you draw down the loan that you start to incur costs and interest. Do you provide assistance in obtaining a loan? It is the responsibility of each individual to ensure they have the funds to purchase the franchise. However, we do have relationships with a number of providers who will, subject to personal circumstance loan funds to our franchisees. LDF Professions are a private broker company that only funds professional people. They have agreed to fund franchisees with unsecured personal loans to the value of the franchise plus working capital. The repayment profile of the loans is 3 – 5 years dependant upon your personal preferences. Our contact at LDF is Aaron Leclercq his telephone number is 01244 527300. Page 20 of 31
  • 21. We have also negotiated with Nat West bank and, subject to personal circumstances, they will loan a candidate 65% of the required funding which includes the franchise purchase price and some initial working capital. The loan is a flexible loan spread over the 5-year life of the franchise. The contact at the bank is Mr Shanul Ishmail (phone number 0800 092 9117). Shanul works in THE Natwest Franchise Section reporting to Mr Mark Scott. Details of the franchising section of other banks are as follows: HSBC Contact: Mr Ken Braddock Franchise Unit Tel: 0121 455 3438 12 Calthorpe Road Email: Franchiseunit@hsbc.com Birmingham Website: www.hsbc.co.uk B15 1QZ Lloyds TSB plc Contact: Mr Richard Holden Franchise Unit Tel: 02920 355 971 2nd Floor Email: Franchising@lloydstsb.co.uk Northgate House Website: www.lloydstsbbusiness.com Kingsway Cardiff CF10 4LD The Royal Bank of Scotland plc Contact: Denise Aitchison RBS Franchise Section Tel: 0800 092 9117 Level 2 Email: franchiserbs.retailbanking@rbs.co.uk 2 Waterhouse Square Website: www.rbs.co.uk 138 – 142 Holborn London EC1N 2TH Nat West Contact: Shanul Ishmail / Mark Scott Natwest Franchise Section Tel: 0800 092 9117 Level 2 Email: franchise.retailbanking@natwest.com 2 Waterhouse Square Website: www.natwest.com/franchise 138 – 142 Holborn London EC1N 2TH Clydesdale Bank, Yorkshire Bank, Bank of Scotland and Barclays Bank do not have a dedicated franchise division. In these instances please contact your local branch manager. Alternatively a number of franchisees have re-mortgaged and added the cost of the franchise to their mortgage. If this is of interest our sister company abacus ifa Page 21 of 31
  • 22. Limited could organise this for you. The person to contact is Mr Neil Richmond on 0844 050 2254. How much working capital do I require? As you can see from above as part of the franchise fee we effectively set up your practice. The only additional costs you will incur are a small amount of general stationery, some initial advertising, telephone, fax and mobile phone costs and petrol. All in all this should add up to no more than £5,000 in your first year. What you do have to accept, however, is your income will be very small for the first 6 months as you build up your client base. So when calculating your working capital requirements you should build this in. Each franchisee’s individual requirement is different so you will have to calculate this for your self. Do I wait until I am ready to start a franchise before coming on an induction course? There are a number of practical issues such as incorporating the company, ordering data, organising telephone installation, organising software installation and so on that can only take place after you have purchased the franchise. Therefore in reality it will take the best part of a month after signing up that you will be in a position to go on your first appointment. The second point to bear in mind is that the 5 years only commences on the date of your first appointment and not on the date you sign the franchise agreement. It is therefore best to come on an induction course at least one month (preferably two) before you wish to commence trading. How can I find out which territories are available? You need to go to the following website www.territorymapping.co.uk once here you will then be confronted with a screen asking for a user name and password. The User Name is abacus The Password is st3v3 This will take you into our map of the UK with the territory borders marked on it. At the top of the screen you will see a row of icons, click on the binoculars and this will bring up a search engine. Type in your town and press enter. This moves the screen to that part of the map. Using the magnifying glass with the + sign in it will enlarge the territory you are interested in. If the territory is shaded in purple then it is sold, otherwise it is still available. Page 22 of 31
  • 23. Who installs the software? All the CCH software is simply to install but you will be given a help line number direct to one of their specialist engineers who can talk you through any issues you may have. Paul Herring our IT Manager will also be on hand to advice you. As with CCH the Sage line 50 software is easy to install but again a help desk is available for any required trouble shooting. What support do we get from CCH? CCH has appointed Gareth Potter as the abacus accounts manager and he has prepared a manual for all our franchisees, which covers the following areas: - Contact details for support, sales and engineers Procedure for implementing the CCH Software List of training centres throughout the UK Additional product price list If any of our franchisees has an issue with CCH Gareth is there to resolve any problems as quickly as possible. Similarly Andy Gibb is our account manager at Sage and he can provide you with prices of software you may wish to sell to your clients. More details of software support will be given on the induction course. As I grow my practice can I increase my user licences on the CCH and Sage products? In the case of CCH if your client list exceeds 150 then the monthly cost of their software increases by £60 per month. However this is the only increase as the upgrade allows you to have an infinite number of clients. With Sage the cost of line 50 software increases in increments of 25 clients Andy Gibb will provide a price matrix on request. Do I get any training material from CCH? Yes, two of the days on the induction course are dedicated to CCH and when you purchase the franchise you keep the training manuals used on each day. CCH hold regular regional training courses as well and abacus franchisees can receive extra training at a significantly reduced price. Is there a list of ancillary service providers? Schedule 1 of the franchise agreement lists the current providers however we are looking to add to the list on a regular basis. Franchisees are informed of any changes to the list on an ongoing basis. Page 23 of 31
  • 24. If there is a service a client requires that is not on the list contact Head office who will either know somebody who provides the service or will find somebody. Can I use my own associate partners? We have vetted all our providers so that your clients can be confident of the quality of service provided will be value for money. If you have an associate you would like us to add to the panel we would be more than happy to review them. Do I get commission if any of my clients use the alliance partners? Yes, our franchisees receive commission when the client pays for the service provided by the alliance partner. The amount of commission varies from partner to partner. The process for payment to franchisees is as follows: - The alliance partner pays abacus all commissions due to franchisees. All commission received up to the 25th of the month is paid to the franchisees on the last day of the month. Who do I contact at Head Office to organise one of the alliance partners to meet my client? Steve Jackson is based at the Head Office and can assist franchisees on all accounting issues as well as ancillary services. Also at Head Office is the office manager Kay Phillips who will ensure all requests are dealt with in a timely and efficient manner. What IT equipment do I require? Schedule 5 of the franchise agreement lists the minimum specification required for your PC, printer, software and Internet connection. 1. Minimum PC Specification Processor Intel Celeron, 2.4 GHz or higher Colour Monitor (1024x768 resolution) 80G Hard Drive CD-ROM DVD-ROM (desirable) RAM 512 MB (1024MB preferred) 2. Specification of Printer Any inkjet or laser printer 3. Software Page 24 of 31
  • 25. Microsoft Windows 2000 Professional or Windows XP Pro (recommended) Microsoft Office 2003 Basic (with Word and Excel) Strongly Recommended – Firewall and Anti-Virus Software 4. Internet Connection Broadband Internet Connection (where/when available) or Dial up Internet Connection (where Broadband is not available) Does abacus have anyone who could advise me to ensure my PC meets your specification? Paul Herring our IT manager would be happy to discuss your equipment specification. Do you have any minimum performance targets? Yes the table below lays out the minimum performance targets. Year end Cumulative Gross Sales 1 £25,000 2 £50,000 3 £60,000 4 £70,000 5 £80,000 What happens if I don’t meet the performance targets? In the event that the Franchisee fails to attain the performance targets, the Franchisor may: 1 Require the Franchisee to attend further training in relation to the Business as the Franchisor may specify (all costs related to such further training to be borne by the Franchisee); 2 If after further training the Franchisee still fails to meet the minimum performance targets then the franchisor will permit the Franchisee to continue to operate the Business in accordance with the terms of this Agreement except that the exclusivity provisions in relation to the Territory shall not apply and the Franchisor shall be permitted to appoint additional franchisees to operate in the Territory. Page 25 of 31
  • 26. Do I need to open an office as soon as I commence trading as an abacus Franchisee? No we believe in keeping your overheads as low as possible. Most of our franchisees commence trading whilst working from home. As you grow your business you will arrive at a natural point when it is in the best interest of your business to progress to an office. There is no time scale within the franchise agreement that says you must be in an office by a certain date. When you do move into an office you would not be expected to move into a shop front premises. What are the management/royalty fees and when do they have to be paid? Section 15 of the franchise agreement details the procedure for payment of royalty/ management fees. The table below lists the payment structure. Payment Period Fixed Additional Management Management Charge Charge Opening Date to £2,500 or 10% (ten Nil Opening Date plus 12 percent) of Gross (twelve) months Sales (whichever is the lower) Opening Date plus 12 £5,000 (a) 5% (five per (twelve) months and cent) of Gross Sales 1 (one) day to Paid by 12 equal in excess of £50,000 Opening Date plus 24 monthly instalments but less than (twenty four) months of £416.67 each £150,000; and (b) 3% (three percent) of Gross Sales in excess of £150,001 during the period of (i) Opening Date plus 12 (twelve) months and 1 (one) day and (ii) Opening Date plus 24 (twenty Page 26 of 31
  • 27. four) months Opening Date plus 24 £6,000 (a) 5% (five per (twenty four) months cent) of Gross Sales and 1 (one) day to Paid by 12 equal in excess of £60,000 Opening Date plus 36 monthly instalments but less than (thirty six) months of £500.00 £150,000; and (b) 3% (three percent) of Gross Sales in excess of £150,001 during the period of (i) Opening Date plus 24 (twenty four) months and 1 (one) day and (ii) Opening Date plus 36 (thirty six) months Opening Date plus 36 £7,000 (a) 5% (five per (thirty six) months cent) of Gross Sales and 1 (one) day to Paid by 12 equal in excess of £70,000 Opening Date plus 48 monthly instalments but less than (forty eight) months of £583.33 £150,000; and (b) 3% (three percent) of Gross Sales in excess of £150,001 during the period of (i) Opening Date plus 36 (thirty six) months and 1 (one) day and (ii) Opening Date plus 48 (forty eight) months Opening Date plus 48 £8,000 (a) 5% (five per (forty eight) months cent) of Gross Sales and 1 (one) day to Paid by 12 monthly in excess of £80,000 Opening Date plus 60 instalments of but less than (sixty) months and £666.67 £150,000; and (b) each consecutive 6 3% (three percent) (six) month period of Gross Sales in thereafter excess of £150,001 Page 27 of 31
  • 28. during the period of (i) Opening Date plus 48 (forty eight) months and 1 (one) day and (ii) Opening Date plus 60 (sixty) months Are there any other costs other than management fees? From year 2 it is the franchisees responsibility to maintain: - Data Protection Registration Professional Indemnity Insurance Employers Liability Insurance CCH Software Licence Sage Software Licence KashFlow Accountancy Program Subscription CRM Licence Fee Quotation Licence Fee The only other cost is an annual advertising levy of £400. The levy is due for payment on the anniversary of the agreement. How do I find my clients? To ensure the quality of appointments generated for our franchisees abacus has enlisted the support of two call centres one in Sunderland (in fact based in the same office complex as abacus Franchising Company) and one in Chester. Both call centres work to strict guidelines and scripts developed over the past five years. They answer the phone and make calls as abacus and are responsible for generating one hundred confirmed and verified appointments in the first year from Bands A to D. Both call centres are vastly experienced and we will give you the opportunity to listen in on calls being made during the induction week. As part of the training week you will be given advice on how to market your business in your area. Do you confirm and verify the appointments generated by the Call Centre? Yes, all the potential clients have been contacted by our Call Centre 3 times before the franchisee goes on an appointment. We believe the call centre is one of the main keys to the success of our franchise. Page 28 of 31
  • 29. Do you contact the potential client after the franchisee has been on the appointment? Yes, after about 2 weeks we contact the potential client again, this time as the abacus-marketing department. Any feedback we receive from this call is fed back to the franchisee. Can I continue to use the Call Centre after receiving my initial 100 appointments? Yes we have sufficient data to generate at further appointments. The franchisee can purchase the additional appointments in minimum batch of 10 appointments (cost of £95 per appointment). How are the Call Centre bands broken down? The bands are broken down by turnover and we generate appointments by the bands as per the following table Number of Band Annual Turnover of Potential Client appointments Band A More than £750,000 10 Band B Between £250,000 and £750,000 18 Band C Between £100,000 and £250,000 53 Band D Between £60,000 and £100,000 19 What fees do I charge clients? We will give you guidance on what to charge clients but ultimately the decision is yours. Our guidance is based on information provided by our existing franchisees in your region. Do franchisees have to prepare monthly returns to Head Office and why? Yes franchisees must complete a monthly return issued by Paul Herring our IT Manager. The return details clients won, business type, turnover, accountancy services provided and fees charged. This data helps us to build up information on how a franchisee is performing and helps us identify where a franchisee requires help. Page 29 of 31
  • 30. The data also allows us to help guide new franchisees in pricing their first few contracts based on what existing franchisees have charged similar clients in the same region. Finally we use the data to find new ways in which to support clients. For example we can remove the names of clients then sort the data by industry type. We then contact our Insurance provider who in turn can approach insurance providers such as Norwich Union to quote abacus for an employer’s liability insurance policy for engineering businesses. As a network we may 50 engineering businesses so the insurance provider will discount the policy. Individual franchisees may only have 1 or 2 engineering businesses but because the network has 50 they are able to offer their clients a discounted insurance policy. The client is happy, he has received a reduction in his insurance premium, the franchisee, franchisor and insurance broker are happy as they receive an introducers commission and the insurance provider is happy as they are receiving several insurance policies. What ongoing help will I get and from whom? The role of Head Office is to support franchisees, identify problems and provide solutions. We will always take the franchisee through each of his appointments on a regular basis reviewing the feedback received via the call centre. He will also review the monthly returns supplied by the franchisee. If in discussion with the franchisee it is agreed further training, on Sales and Selling (for example), is required Head Office will organise this. If IT support is needed on the Intranet the IT manager will provide this and so on. Is the business seasonal? No. Companies have various year-ends through out the year however there are certain peak times such as January. January is a busy time, as all tax returns must be submitted by 31st January. What hours will I be expected to work? Normally you will be expected to work standard office hours of 9am – 5pm. However in peak times you can expect to have to work longer hours. You have also got to be prepared to be flexible and fit your hours around the needs of your client base. Do I have to pay for my own local advertising? Yes it is the franchisees responsibility to carry out their own local marketing and advertising. We will support you and in the marketing manual you will find various advertising layouts and ideas for promotions and fliers. Page 30 of 31
  • 31. We also have a stand, which can be borrowed by franchisees to use as a display. Our office manager Kay Phillips will be more than happy to assist you in any promotional activity you wish to carry out. What happens if I already have clients? We would expect you to transfer those clients into the new abacus business. However, we would ring fence these clients and not include them in any calculation for management charges. Obviously you would be able to offer all the other ancillary services to your existing clients. Why are there 3 parties to the franchise agreement? Who is the guarantor? The agreement is between abacus Franchising Company Limited (the franchisor) and the limited company incorporated for the franchisee (e.g. abacus 123 Limited). As a limited company is a separate legal entity the franchisee is actually the limited company (in this example abacus 123 limited). Because of this we require the person who is purchasing the franchise to sign the franchise agreement as the guarantor. By doing this it ties in the three parties to the franchise agreement; you, the limited company we set up for you, and us. Now I have looked at the presentation on the CD read these questions and answers, what do I do next? The next stage is to visit head office and attend one of our “Get To Know Us Days” Following the visit to head office if you are still interested in our franchise opportunity we will introduce you to 2 – 3 of our existing franchisees and give you a copy of the franchise agreement to seek advice on. The final stage is to book a place on one of our quarterly induction courses. To book your place send a cheque made payable to abacus Franchising company limited for £1,250.00 plus VAT (£1,468.75) to the following address: - 3a Colima Avenue Sunderland Enterprise Park West Sunderland Tyne and Wear SR5 3XB Don’t forget to inform us which territory number you wish to reserve. Page 31 of 31