[G.W.C]

Been thinking of going down this route for a while now, just wondering who receives the BACS payments? Does the francisee into there personal account or is there a way of setting a separate account, under the business name, where both myself and the franchisee can keep an eye on payments etc

Thanks in advance

[paul alan]

If you start receiving the payments and then "pay" the franchisee you could be deemed an employer by hmrc.


A franchisee should be allowed to do the work when they want, how they want and receive the payments themselves.


If you want to keep an eye on what they are earning you may struggle as unless you are with them all the time you cant. You can have all the work on cleaner planner (or similar) and send them worksheets so you know what work they have been doing of yours.


Some franchisors will supply the franchisee with purified water which I think is a good thing as they cant make their own and go working on the side, well they can if they go to the trouble of buying an ro system etc.


Speak to Ian Lancaster. he is the go to guy. I have bought one of his franchise packages and its worth 10x what I paid for it.

[davids3511]

If you start receiving the payments and then "pay" the franchisee you could be deemed an employer by hmrc.


A franchisee should be allowed to do the work when they want, how they want and receive the payments themselves.


If you want to keep an eye on what they are earning you may struggle as unless you are with them all the time you cant. You can have all the work on cleaner planner (or similar) and send them worksheets so you know what work they have been doing of yours.


Some franchisors will supply the franchisee with purified water which I think is a good thing as they cant make their own and go working on the side, well they can if they go to the trouble of buying an ro system etc.


Speak to Ian Lancaster. he is the go to guy. I have bought one of his franchise packages and its worth 10x what I paid for it.

No this is wrong. Once you pass the full amount onto the franchisee without deducting a fee you are just acting as their agent.

[G.W.C]

Thanks for your help. I think my main concern is, what happens if it doesn’t go to plan and decide the franchise isn’t working out for that particular person. It would mean having to ask all customers to change the bacs details again, then again when a new franchisee is found. I’m just trying to iron out all potential problems.
I briefly spoke to Ian Lancaster via email a few months back

[Tom-01]

Setup a holding account so all payments go in there and then pass the money on to the franchisee. That way you are acting as their agent.

[johnwillan]

If you start receiving the payments and then "pay" the franchisee you could be deemed an employer by hmrc.


A franchisee should be allowed to do the work when they want, how they want and receive the payments themselves.


If you want to keep an eye on what they are earning you may struggle as unless you are with them all the time you cant. You can have all the work on cleaner planner (or similar) and send them worksheets so you know what work they have been doing of yours.


Some franchisors will supply the franchisee with purified water which I think is a good thing as they cant make their own and go working on the side, well they can if they go to the trouble of buying an ro system etc.


Speak to Ian Lancaster. he is the go to guy. I have bought one of his franchise packages and its worth 10x what I paid for it.

No this is wrong. Once you pass the full amount onto the franchisee without deducting a fee you are just acting as their agent.

You can deduct a "fee" whilst acting as an agent.

[johnwillan]

Thanks for your help. I think my main concern is, what happens if it doesn’t go to plan and decide the franchise isn’t working out for that particular person. It would mean having to ask all customers to change the bacs details again, then again when a new franchisee is found. I’m just trying to iron out all potential problems.
I briefly spoke to Ian Lancaster via email a few months back

Centralised banking does resolved this issue, however it also creates additional work such as payment allocation and potential debt collection, both these points can be overcome by using "GoCardless" integrated with an app such as Aworka or Cleaner Planner.

Having said that clients do change bank details as requested but it's not without issues, on balance a centralised GoCardless system would work best.

[mike1986]

I imagine you would need to go VAT registered as well, as the turnover of the holding account would be very high

[Ian Lancaster]

Interesting point.  I wonder what the VAT's take on that would be?  Obviously the money is 'turnover' - it's the revenue generated by work, but would they allow that it was the joint turnover of several independent traders?

Needs someone brave to approach HMRC for a definitive ruling - any volunteers?

[johnwillan]

Interesting point.  I wonder what the VAT's take on that would be?  Obviously the money is 'turnover' - it's the revenue generated by work, but would they allow that it was the joint turnover of several independent traders

Needs someone brave to approach HMRC for a definitive ruling - any volunteers?

It’s often tested, wether they win or not comes down to you having a clear written understanding amongst all parties that you are acting as an agent and not the principal.

There’s plenty of information online from various parties including HMRC & Customs.

Many industries such as mini cabs, temp agencies, travel agents use this system

[G.W.C]

Thanks for the replies. So what is the common way of receiving bacs payments for francisees, is it simply paid into there account and then they pay you the agreed fee?

[johnwillan]

Thanks for the replies. So what is the common way of receiving bacs payments for francisees, is it simply paid into there account and then they pay you the agreed fee?

Yes

[mop-n-scrim]

Thanks for the replies. So what is the common way of receiving bacs payments for francisees, is it simply paid into there account and then they pay you the agreed fee?

Thats the way we do it. Works fine. I use CP & CP have set it so that I can switch between my account & theirs, this way I am able to check work is being regularly done.
New customers are put onto GoCardless (set up via our website), but it is a separate account for each franchise, with the payment going to their bank account.
Why create work for yourself, when its not needed! They pay a monthly fee to me, thats all I am interested in, & I guess the same for you too.....

[STEVE-UK]

Thanks for the replies. So what is the common way of receiving bacs payments for francisees, is it simply paid into there account and then they pay you the agreed fee?

Thats the way we do it. Works fine. I use CP & CP have set it so that I can switch between my account & theirs, this way I am able to check work is being regularly done.
New customers are put onto GoCardless (set up via our website), but it is a separate account for each franchise, with the payment going to their bank account.
Why create work for yourself, when its not needed! They pay a monthly fee to me, thats all I am interested in, & I guess the same for you too.....

So all GC accounts are set up in your name for each franchisee, payments are then forwarded onto their bank direct from GC?
Or
 GC send payments to your bank, you then forward onto franchisee?

 if so does this require you to VAT registered?

[Smudger]

I would have thought each franchise had its own account you provide them with a round and show them how to clean etc... and charge for them to buy the franchise then they send you a % of the turnover you provide the more work you send them the more they pay you, if they fail to complete the cleans they still pay the % if they start losing customers a simple clause would mean you withdraw the franchise from them

So you wouldn’t pay vat as your income is a % of the turnover until of course you have so many that the % income goes over the vat threshold

Darran

[mop-n-scrim]

So all GC accounts are set up in your name for each franchisee, payments are then forwarded onto their bank direct from GC?
Or
 GC send payments to your bank, you then forward onto franchisee?

 if so does this require you to VAT registered?
[/quote]

The GC are separate accounts, the GC fee is debited from it & then paid into the franchisee's bank.
Its just my company website acts as the conduit. So from a customer experience they are setting up through Mop-n-Scrim, & the payment goes direct to the cleaner.

Hope that makes sense 

[Perfect Windows]

We collect payments centrally acting as agents for our franchisees. The fact that we're acting as agents is detailed in the franchise agreement and is stated on every single invoice produced by Aworka.

The collected payments are passed, net of GC fees, once a week, to the franchisees.

The franchisees pay their franchise fees separately. The money from GC is never ours and VAT doesn't enter into it.

Vin

[mike1986]

We collect payments centrally acting as agents for our franchisees. The fact that we're acting as agents is detailed in the franchise agreement and is stated on every single invoice produced by Aworka.

The collected payments are passed, net of GC fees, once a week, to the franchisees.

The franchisees pay their franchise fees separately. The money from GC is never ours and VAT doesn't enter into it.

Vin

Hi Vin,

So just to clarify...the money from customers is collected via go cardless, and the money is then distributed directly from go cardless to the franchisees accounts, therefore it never actually enters your bank account?

[Perfect Windows]

GoCardless transfers money daily into a separate account of ours that's used for nothing else.

Then, once a week, we check Aworka for the amounts collected per franchisee and that amount is transferred to the franchisees.

It's because the money passes through one of our accounts that it's vital to clarify on every invoice that we are acting as agents in collecting the cash. If that's not crystal clear, you could end up in a world of VAT pain.

Vin

[mike1986]

Sounds like a very good system. Thanks