Karl Sandall, group chief executive of the TaxAssist Direct Group, is a true veteran in the game. While the pandemic has called into question the future of many businesses, Sandall explains how TaxAssist has remained robust, even expanding the franchise to the U.S. in the midst of the crisis.
Interview by Amanda Peters, staff writer at Global Franchise and What Franchise
AP: How has TaxAssist Accountants evolved since you became group chief executive director in 2002?
KS: Back then it was identified that small businesses were not looked after by the accountancy profession and on the back of self-assessment in the U.K., we launched TaxAssist. There were a lot of small business clients that wanted to use our services and we felt that a lot of people working in accountancy commercially might want to run their own practice but did not have the skills or the courage to do it. This made the franchising route a no-brainer.
We set up 25 years ago and after proving the model was successful in the U.K., we decided to export it to Ireland as we felt the same need for our services existed there, too. A few years later, we started to advertise in Canada and Australia as we went after English-speaking countries that were also part of the commonwealth.
We did find a master operation in Canada but then the Chartered Professional Accountants Canada (CPA) changed the rules which held us up, but we are still talking to potential people for Canada. We then concentrated on Australia and our research found the same with small businesses there.
AP: Why expand to the U.S. now? How has the pandemic affected entering this market?
KS: We always had our eye on the United States and felt that it would be an excellent base for TaxAssist to grow internationally and, hopefully, become global at some point. Our research found the same two main ingredients – there were potential franchisees and potential clients for our franchisees.
We started all the work for registering trademarks during our research, speaking to the banks, franchise experts, and investors. However, rather than a master operation, we wanted to own it ourselves. We own 85 per cent and our two investors, an American in New York with a senior financial background and one of our existing franchisees in the U.K. who worked in the States for many years, own the remaining 15 per cent between them.
We launched the operation this May with a view to attracting small business clients and area representatives and franchisees.
“We need to have faith that we will get back to some form of normality, whether that is in a few months or years”
COVID hasn’t changed the strategy fundamentally. In the initial months, we will be doing more Zoom, Microsoft Teams and virtual calls rather than face-to-face meetings. For instance, the Franchise Exhibition was held online at the end of May and we embraced that, but as soon as we can get back to some form of normality, we would like to, within the realms of sensibility and safety, of course.
AP: Are there any takeaways from similar periods of economic uncertainty, such as the recession in 2008, that could provide some kind of silver lining or guidance to franchisors struggling amidst COVID-19?
KS: We always said our business model was recession-proof. Although coronavirus is a completely different entity affecting the whole world, we need to have faith that we will get back to some form of normality, whether that is in a few months or years.
We try to put ourselves in the place of a potential franchisee looking at our business model. We don’t sell franchises, we award them. And we never award a franchise to someone if we think there is any possibility of failure. If we feel there is anything wrong in their psyche or the region they’re looking to open in, we will always be honest with them. In other words, we ask would we do it ourselves, and if the answer is yes and the candidate is right, we don’t see any reason to stop advertising for franchisees.
AP: How does TaxAssist stand out from its white collar franchise competitors?
KS: Help on the high street for small businesses has disappeared and gone into large faceless electronic operations. There was a PwC survey a couple of years ago which stated that 70 or 80 per cent of small business owners across the world craved more human interaction with their advisors.
Our shop and storefronts put us on the high street among small businesses, 24 hours a day, 365 days a year. We won’t necessarily set up in the middle of a big shopping mall or out of town as we try to get in amongst the small business communities in towns and cities.
What else makes us stand out is that we are very careful about the quality of franchisees we recruit. Most of them join us because they want to run their own business, but they’ve also got immense pride and respect for small businesses and what they bring to the economy. The other aspect is that we heavily embrace modern technology to protect data and our franchisees have state-of-the-art software. Small business owners, thus, benefit from both – modern accountancy and bookkeeping technology but they also have the person to speak to for advice as the role of the bank manager has basically disappeared. Small businesses use us as a one-stop-shop, centered around professional accountancy and taxation services.
AP: The brand is part-owned by franchisees who can buy shares in the group, right?
KS: The way it is set up is that shareholders have shares in TaxAssist Direct Group Limited and the group owns all the other countries, brands, and businesses. We then appoint MDs who may have shareholdings, but all franchisees are eligible to buy shares in the group and benefit from the activities of the whole group. There are no hidden companies as everyone has access to everything.
Currently, we are roughly 40 per cent franchise-owned but I would like to see that number increase over the years. Being the main shareholder, the plan is to start relinquishing some of those shares as I get older to see the group become predominantly owned by franchisees.
AP: What are TaxAssist’s expansion plans?
KS: We are still only half full in the U.K. and have a bit of growth to do in Ireland and Australia, and then across North America. In liaison with our Irish partners, we have a managing director there, and we are keen to expand further into Europe. We would like to take the brand into northern Europe to start, specifically France, Germany and Spain. We are not sure how far yet as we’re waiting for Brexit to be decided.