Tax Implications for Buying a Second Franchise & Exiting Your System with Tab Burkhalter

Tab Burkhalter is the managing partner of The Burkhalter Group, which is composed of a regional law firm, regional CPA firm, business start-up and back-office service provider (Numbers House) and commercial real estate lessor. Tab has extensive experience in helping franchisees establish their businesses. Key Takeaways: [0:18] Today’s episode of Franchise Euphoria is brought to you by IndyFranchiseLaw.com, a leading resource in the franchise space. Head over to IndyFranchiseLaw.com learn more! [1:00] Our episode today features Tab Burkhalter, the leading manager at the Burkhalter Group and is also a CPA. [1:51] Josh welcomes Tab Burkhalter to Franchise Euphoria. [2:14] Tab takes a minute to tell Franchise Euphoria about his background as a CPA and how he came into the franchising industry. [3:39] About 80% of the work Tab does deals with restaurants. [5:07] One of the biggest decisions a franchisee can make when opening their second location is determining whether they will open a separate LLC to conduct the business. [7:08] When setting businesses up, Tab suggests establishing yourself as an LLC but elect to be taxed as an S Corp so that you save on self-employment taxes. [9:05] Tab suggests the second consideration franchisees should be making when considering a second location is what tax grants or incentives are there for where you’re putting your second location? [12:42] When buying a second franchise, you must redo your due diligence in looking over the Franchise Agreement, because while you’re already familiar with the version you signed years ago, there have likely been updates made that you may or may not approve of. [15:18] As has been evidenced in this episode, Josh notes how important it is to have a CPA on your team to make sure you get the proper deductions, make sure you’re doing things the right way, and ultimately save money in the long run. [17:25] When you start planning your exit strategy for a franchise system, you need to familiarize yourself with the terms your franchisor has set out for you. [20:51] In certain situations, Tab will sometimes advise the franchisee to purchase the property that the franchise is on, so that way they have some cards to play when negotiating a successor or just general corporation with their franchisor. [22:21] Tab often finds that franchisees just look at the first three years of their business when cultivating a plan when they need to be thinking through five to ten years. [25:11] If you want to learn more about Tab or seek his expertise, you can visit his website at www.TabBurkhalter.com or call (865) 984-4080. [25:45] Thanks for listening, and please, reach out to Josh anytime through email at [email protected]. If you enjoyed this interview, please leave us a review on iTunes.   Mentioned in This Episode: [email protected] www.franchiseeuphoria.com www.indyfranchiselaw.com www.tabburkhalter.com www.thenumbershouse.com www.facebook.com/NumbersHouse twitter.com/thenumbershouse www.instagram.com/thenumbershouse www.linkedin.com/company/the-numbers-house