The Midway Tax Service franchise was an up-and-coming brand in the tax preparation and service market. This highly competitive and mature market space has been a difficult market to compete with for any new tax preparation franchise model, but Midway was proving that they had a market niche and a service offering that could withstand the competitive headwinds.
The organization had grown through organic means and in several years had opened two corporate stores in the Atlanta, Georgia market. After experiencing strong unit-level results and growth, the organization realized the opportunity to expand into new markets and take market share from other established tax preparation franchises such as H&R Block, Jackson Hewitt and Liberty Tax.
In 2009, Midway Tax turned to Franchise Marketing Systems to franchise the business model and take the system out to new markets through independent franchise ownership. Franchise Marketing Systems developed a comprehensive franchise strategic planning model.
By spending time in the corporate locations, attending sales meetings and getting to know the corporate culture of Midway Tax, the Franchise Marketing Systems team was able to build a franchise strategy that could duplicate the successful business model.
A franchise industry research study was conducted to understand where other tax preparation franchise systems had success, failures and opportunities so that the market comps could provide direction for Midway as well.
The franchise structure was put in place with a reasonable initial franchise fee, a royalty structure that allowed Midway to offer strong support and see profitability from the success of the new franchise units and a territory model that would allow for franchise unit growth and avoid cannibalization between locations.
Due to the nature of the business, Midway Tax is a very seasonal franchise model which needs to get franchisees into business before November of any given year in order for them to do business for the coming tax season. Midway Tax had built much of its growth through focusing on rapid refund tax filings which served a unique market segment and were allowing Midway to take market share from the larger, more established tax preparation franchises.
The franchise model was designed to focus on this market segment and allowed for franchisees to open temporary locations in low investment opportunities such as small businesses within retail outlets, banks and other high-traffic locations. Midway was what we would call a very “entrepreneurial franchise”, the business was founded by first-generation immigrants who were aggressive, quick to move and not risk averse.
This allowed the business to take advantage of opportunities and grow in ways that traditional franchise organizations could not. The size of the organization also allowed for a very tight-knit relationship with the franchisees and support that proved to be extremely beneficial to the new franchise owners.
Franchise Marketing Systems developed a business development campaign and designed a franchise recruitment model around entrepreneurs with limited capital, and strong market and sales abilities and geo-targeted the Southeast to be able to leverage the small amount of brand equity in the place.
The first year of launching the franchise model produced significant results with 14 new franchisees joining the system. These franchisees were focused primarily in the South Eastern United States but were spread out amongst 4 states. The first year of sales created the need to build an infrastructure and put key personnel in place who could support franchisees and help manage growth.
Due to the seasonal nature of the business, there was a lot of activity and stress on the system resources during a short time period, then the balance of the year was relatively calm. This created unique demands on the franchisor’s staff and people and required a specific strategy to manage.
Franchise Marketing Systems suggested outsourcing the majority of the franchise training, franchise support and franchise management in order to save costs and not go through the hiring and firing of staff who would be needed for a short time period then unjustified the balance of the year.
Today, the tax preparation franchise has over 40 units, with a strong regional presence in the Southeast and a unique market position which has allowed the franchise to differentiate from the larger competitors and successfully grow the business model. Although there are many constraints to a seasonal tax preparation franchise model, the opportunity for growth is apparent and with good franchise operators, Midway will continue to experience significant growth.
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FMS is a team of expert franchise consulting professionals based in Canada that provides solutions for franchise development, franchise consultation, and expansion of businesses globally.