ADI franchise or independent: how to run the numbers

Franchise or independent is the decision every newly qualified driving instructor makes with the least information, usually while the training school that just taught them is holding a contract out.

Neither is right for everyone. What you can do is compare them on the same terms, and ask the questions that separate a good franchise from an expensive one.

What you are buying

A franchise is not one thing. Strip the brochure back and it bundles some combination of:

• A car, usually leased, dual-controlled, insured and maintained
• A stream of learners, from the franchise’s advertising and reputation
• The brand — a name learners have heard of and a livery
• Administration — bookings taken for you, payments collected, chasing done
• Support — someone to ask, cover when you are ill, standards-check preparation

Going independent means every one of those is yours to build.

Run it as an hourly figure, not a weekly one

The mistake is comparing a franchise fee against a lease quote. Compare what you keep per taught hour, at the number of hours you can realistically teach.

For each option, work out:

1. Hours you will actually teach in a week. Not slots you could fill — hours you will fill, allowing for cancellations, no-shows, school holidays and the winter dip.
2. Your fixed weekly cost. For a franchise, the fee. For independent, the lease or finance payment, insurance, road tax and a realistic servicing and tyre provision.
3. Your variable cost per hour. Fuel or charging, and the mileage between pick-ups.
4. Revenue per hour, at the price you will charge in your area.

Then: (revenue per hour × hours) − fixed weekly cost − (variable per hour × hours).

Do it twice, once at a full diary and once at a bad week. A franchise fee is fixed whether you teach 30 hours or 12; independence moves more of the cost with you, but leaves you to fill the diary.

The costs that sit on both sides

Some things you pay either way, and a franchise that implies otherwise is worth reading more carefully.

Cost	Frequency	Amount
ADI registration renewal	Every 4 years	£300
New DBS check	Every 4 years	With renewal
ADI standards check	When DVSA asks	No fee
Accountancy, if you use one	Annual	Varies
Software for diary, payments and records	Monthly	Varies

Registration is yours, not the franchise’s. So is your standards check: DVSA can remove you from the register if you “fail to meet the required standards”, “fail to attend the standards check when required” or refuse to take it, and no franchise agreement changes that.

The tax point most comparisons miss

A franchise fee is an allowable business expense, so it reduces your taxable profit. It does not reduce your turnover — and turnover is what Making Tax Digital tests you against. Qualifying income is “the amount before expenses (also known as turnover)”.

So a franchised instructor taking £38,000 in lesson fees and paying £10,000 in franchise fees has £28,000 of profit and £38,000 of qualifying income. It is the £38,000 that decides when quarterly filing starts. The MTD thresholds and deadlines are worth reading before you assume the fee buys you out of it.

The other tax point cuts the other way. If the franchise supplies the car, you are not claiming capital allowances on it and you are not caught by the rule that excludes dual-control instructor cars from HMRC’s flat-rate mileage scheme — the franchise is carrying both. If you buy your own car, both land on you. What an instructor can claim covers the arithmetic.

Questions to ask before you sign

The answers to these tell you whether a franchise is worth its fee.

On learners

• How many learners will be passed to me in an average month, and what is that based on?
• What happens to the fee in a month when no learners come through?
• If a learner finds me directly, whose learner are they?

On the fee

• Is the fee fixed, or does it change with hours taught, learner numbers or seniority?
• What is included, exactly: lease, insurance, servicing, tyres, breakdown, fuel?
• Is there an excess on the insurance, and who pays it?
• Is there a minimum term, a notice period, or a fee for leaving?

On the car

• What is the mileage cap, and what does exceeding it cost?
• Who supplies a replacement car during a service, a repair, or after an accident?
• Can I use the car privately, and does that change the insurance?

On leaving

• Who owns the learner list when I go?
• Is there a restrictive covenant — a radius or a period I cannot teach in?
• What happens to a learner’s prepaid block booking if I leave mid-course?

People skip that last group and regret it when they leave. Get the answers in writing.

When each one tends to win

These are rules of thumb.

A franchise tends to win when you are newly qualified with no reputation, when you cannot or would rather not finance a car, when the local market is dominated by one or two names, when your diary will be light for the first year, or when you value predictability over margin.

Independence tends to win when you can already fill a diary, when you have a car or can finance one on terms you like, when you are in an area where personal recommendation travels further than a brand, when you want the learner relationships to be yours, or when you can see yourself adding a second instructor.

There is a middle path: franchise while you build a reputation, and set up your own booking page, payment method and learner records from day one so that when you leave you take the business with you. Ask about ownership of learners before you do this — some agreements say otherwise.

What independence costs to run

The car is the obvious cost. The ones people underestimate are:

• Being found. Without a franchise’s advertising, learners have to be able to find you: a page with your area, car, prices and a booking link, and a presence in local search.
• Admin time. Booking, rescheduling, chasing payment and reminding people is several hours a week at a full diary, and it is unpaid.
• Cover. Nobody teaches your learners when you are ill. Building a relationship with another local instructor before you need one is worth doing early.
• Records. Progress against the test, receipts, mileage, lesson history. Under Making Tax Digital these have to be digital and quarterly anyway.

Most of that comes down to picking a system that takes bookings, takes payment and records progress.

Passdesk does that for £19 a month for a single instructor, whether you are on a franchise building your own side or running independently. When you take on other instructors, the Pro plan covers you plus three. See what’s in each plan, or read how to start a driving school for the steps either side of this decision.