Franchises

[erchess]

I have been looking at the possibility of buying a Tax Office Franchise and I am astonished to find that they all seem to be after the same taxpayers as HRB and JH. Why is it that no one Franchises high end practices? Please don't say "For the same reason there are not Franchises for $75 and up per plate restaurants" unless you can explain the reason for that phenomenon.

[taxmandan]

I have been looking at the possibility of buying a Tax Office Franchise and I am astonished to find that they all seem to be after the same taxpayers as HRB and JH. Why is it that no one Franchises high end practices? Please don't say "For the same reason there are not Franchises for $75 and up per plate restaurants" unless you can explain the reason for that phenomenon.

The explanation lies in the expectations of people. People at the lower economic strata of our society consider tax preparation a commodity, only difference is the price, in their view tax preparation is all the same otherwise. Franchise businesses follow the 'formula' of mass appeal for the same product/service regardless of which location you go to. A Big Mac is the same in any McDonalds anywhere in the US of A. That primarily keeps costs down and they compete on price primarily.

Upper income people expect personalized service that meets the pecular financial situation where they exist. They believe that a franchise business cannot be give them the proper handling. They seek a service that is personal, they want to meet with the same tax professional every year and often will form a personal bond with the preparer. They view their tax person as a professional, much like their lawyer and doctor. If you try to market on price they will avoid you, they understand the value they are paying for(usually).

HRB does/did have up-scale offices that used the same software, etc. as their regular offices but had nicer furniture and better office. Don't know if it has been all that successful, but it is not marketed as a franchise, but as 'Executive' service.

IMHO

[erchess]

That's a very well thought out answer

and I appreciate it. However, I have two responses.

It was a decade or more ago that Block changed the name of Executive Tax Service to H and R Block Premium. On the other hand, Robert Half Offices which the corp bought some time ago still operate under that name because few clients of Robert Half would continue if it changed its name to anything including the word Block.

So there are obvious morals for those of us who want to serve an upscale client base. We must provide excellent customer service along with the opportunity to work with the same person year after year (and, I would add, through the year). We must not try to compete on price.

However, I would submit that Robert Half and Grant Thornton are examples of the fact that high end accounting activities can spread beyond one office and even across the nation. What I would ask is why these companies do not sell franchises. It would seem to be a way to bring more capital into HQ and get more offices built. From the standpoint of a would be owner the guidance of a mother company would seem to be worth a substantial share of the profits. At the same time, I may be missing something because in every area of endeavor except professional sports, businesses that sell franchises tend to be on the low end of their industries. Perhaps there is something I am missing about how it is that the franchise model lends itself more to competition based on price than to competition based on excellent product and excellent customer service with tailoring to individual tastes and needs..

[David1980]

My guess is quality control.

When your standard of quality control is "anything goes" as it seems to be with HRB, JH, Liberty, it's easy to maintain that quality control. You just ignore it.

If you were to start an upscale franchise you would have to have some method to ensure that your franchises met the minimum required quality. If they didn't you would need to either cancel their franchise or do something to maintain quality. I think it would be too costly. You can't put together qualify control procedures like you can in the fast food joint. It takes more than 2 pickles and 3 onions to make a high-quality tax filing and it can't be easily measured.

[Bonnie]

Majority of Franchises Make Their Money From

rapid refunds and bank products. They prepare taxes but that is not their main money maker. It's the fast refunds that generate the most income. For an upscale tax business, the bank products are not a major factor so even though you are comparing two types of tax businesses, you are kinda comparing apples and oranges as they service two different types of clients. This probably has a lot to do with why they do not franchise upscale tax businesses.

[joanmcq]

FYI, Grant Thornton is an international accounting firm, just like the big 4. And they are a partnership setup, not a franchise. A big firm is necessary if you are a big company. It depends on what niche you want to fill. And some SPs even have more than one office. Again, what niche you want to fill.