Franchise Spotlight: Finance
What's Involved in Buying and Running a Finance Franchise? This article finds out.
Businesses always need finance, and yet so many individuals and organisations lack the financial expertise to attend this vital business function. As a result, there is a continuing need for third parties to offer financial services and provide the know-how that so many enterprises need to be successful.
This is a truly diverse sector in which finance franchise opportunities can take many different forms. Financial brokerage, accountancy, bookkeeping, payroll services, lending and international money transfers are just some of the franchises that are available in this potentially lucrative sector.
According to Parliament UK, the financial services sector accounted for 6.5% of the UK’s total economic output (2017) which represents a contribution of £119 billion to the UK economy.
Finance franchise models
A bookkeeping franchise would be a-typical low-cost franchise model. The demand for bookkeeping skills is huge and persistent, driven mostly by legislative requirements.
The initial investment required for such a franchise could be as little as just over £5,000 – which represents 30% of the startup costs. The usual mode of working would involve B2B clients, and it would mostly be quite feasible to work from home.
Business finance could be used to cover up to 70% of your costs. In terms of income, a roster of just 34 clients could generate an annual turnover of £100,000.
A financial services brokerage is another franchise option which requires a low initial fee (investments available from £4,995). And though new entrants may find they need plenty of initial training, the return on investment is fast (usually after just 2 – 3 cases).
This is another franchise which could be home-based. Brokerage franchises will usually offer comprehensive office/admin support, together with a consultancy facility and privileged access to an array of UK lenders happy to serve the financial needs of your clients.
On a larger scale, those with accountancy skills may consider joining an accountancy network franchise. Though the initial investment is around £40K, the ‘ownership’ model effectively means franchisees own 35% of the franchisor.
Global branding, high-quality lead generation, bespoke training and technical support combine to produce a professional package, which will often bring in annual fees starting at around £185K.
Attributes required for running a finance franchise
Ongoing training and support
However, as Paul – a franchisee who retired from the construction industry to become a financial adviser to that sector – points out, there can often be advantages to having had a previous successful career: ‘I have learnt such a lot … [but] they have benefited from my inside knowledge.’
Nevertheless, as an initial ‘financial novice’, he also acknowledges: ‘The training was good and very intensive – you are ready to hit the road running … The aftercare has been excellent. Almost every associate I have contacted has gone out of their way to help me.
Finance franchisors will expect suitable candidates for the financial services sector to enjoy meeting people, to have personal drive and determination, and to possess the self-discipline to be able to follow the demands of their particular franchise model.
With so many possible roles and career opportunities, routines will vary between different franchises. A financial broker could expect to deal with enquiries about commercial mortgages, buy-to-let properties, equity release, factoring and invoice finance, and more on a regular basis.
On the other hand, a bookkeeper may have a narrower range of tax and VAT responsibilities, but a long list of anxious clients keen to arrange fees and complete arrangements.
Whilst accountants may perform many of the tasks mentioned above, they may also be more likely to deal with companies rather than individuals, and often on a larger scale.
Any business that is making a healthy profit must also have its finances in good order. And for the prospective finance franchisee prepared to look carefully at any franchise opportunity the potential rewards could be very encouraging indeed.