Have you been looking to start your own business? In that case, a debt collection franchise may be your best bet!
Sadly, we live in a world where more people fall into debt every day. As these economic times become even more uncertain, that number is simply going to grow. If you have your own debt franchise, businesses collecting on debts will turn to you.
However, debt collection is like any business. When you’re first getting started, you can either give your business a boost or make rookie mistakes that sabotage your chances. With that in mind, here are our five best tips regarding a debt collection franchise.
Research State Requirements For Your Business
The first thing you need to do is conduct some serious research. We recommend first researching the legal requirements of a debt collection franchise in your state.
We’re going to cover some of the steps in more detail, including getting the appropriate license, but you’ll need to check on state requirements for things like registering your business and getting an EIN.
The franchisor can help with some of this, but it’s important that you don’t get taken by surprise as you try to open your debt franchise. State laws can always change.
Understand Other Relevant Laws
Beyond state laws regarding your business, you need to look into specific laws regarding debt collection. You need to study and fully understand The Fair Debt Collection Practices Act, The Fair Credit Reporting Act, The Health Insurance Portability and Accountability Act, The Telephone Consumer Protection Act, and The Gramm-Leach-Bliley Act.
While we won’t detail all of these laws, we recommend starting by studying The Fair Debt Collection Practices Act. It outlines many of the rules and regulations that govern what you should (and should not) do when contacting people about their debts.
Easy Online Marketing
When you first start a debt collection franchise, you’re going to be eager to grow that business. At the same time, you may not have much capital left to invest in traditional marketing.
Our recommendation is to embrace cheap online marketing that offers a serious ROI. For example, you can create your own website or have one professionally made for a low cost. This helps businesses learn more about your services and how to contact you.
You should also maintain a professional presence on multiple social media platforms, including LinkedIn. This helps you promote your franchise to those who might need your services, all while providing customers with multiple ways to reach you.
The Importance Of a Bond and License
Remember when we said that debt collection was like any other business? Another way this is true is that you need to be both bonded and licensed.
Your franchisor can help with this, but you’ll need to get a Certificate of Authority, a collection agency bond, and a debt collection license. Depending on the state you live in, these may require that you jump through a few hoops. When all is said and done, though, you’ll be ready to jump into business!
Set the Right Rates
You started this business to make money, and you can only do so through your fees, so what should you be charging your clients?
The number varies wildly, with some debt collectors charging less than 20% and some charging nearly 80%. For the most part, it’s better to charge higher rates for debts that are harder to collect.
Remember, you don’t have to reinvent the wheel. The easiest way to figure out what fair rates are is to research what other debt collectors in your local area are charging.
Consider an Insurance Franchise with Freeway
Now you know the basics of starting a debt collection franchise, but you may need help taking your business to the next level.
Here at Freeway Insurance Franchise, we make it easy for entrepreneurs to go into the insurance business quickly and provide the support to ensure you can deliver quality service to your clients. To see how we can help you get started, all you have to do is contact us today or give us a call at (877) 822-3024.
