E-mail in my inbox this morning announced the last chance to get a tax franchise for no franchise fee. Actually, that’s not what caught my eye. It was a bullet point that “No Tax Experience Required” that concerns me the most. That’s like starting a restaurant with no cooking experience, it can be done but it’s not a good idea.
Running a business requires a wide breath of knowledge and some will have to be learned as you run the business. But basic knowledge of the field is mandatory from the start. This franchise may give its franchisees the tax software, the procedures to run the office and some tax basics but is it enough to be successful? The casual reader doesn’t know that the “No Tax Experience Required” is for running the business and not for preparing the tax returns. That requires training if not experience. And to make this example more disconcerting is that the IRS is phasing in licensing requirements for return preparers. A new franchisee that buys in expecting to hire tax preparers can lose business when he/she can’t get the people needed or someone gets sick or quits at the height of the season. If the franchise owner isn’t qualified to fill in, they can’t serve their customers and they lose business. Small businesses usually don’t have the backup employees who can fill in quickly. How often have your seen the owner of your favorite coffee shop at the grill or bussing tables because someone didn’t show up? What would happen if they couldn’t cook and had no one else to fill in? Close early or limit their sales? Or, you went in to have your taxes prepared to find no qualified preparer? Would you go somewhere else or come back later?
The bottom line is that if you buy a franchise, you really need to have the basic skills for that business. While you can learn those skills later, you may really need them now when the business is the most vulnerable.