In light of the current economic recession, Dunkin’ franchise owners are rightfully being even more vigilant about the bottom line. The DDIFO is mindful of this and wants to help its members identify ways to save money and boost profits. DDIFO Sponsor, Performance Business Solutions, LLC (PBS) and its sister company, MS Consultants, LLC offer services in areas franchisees might not be aware of that can make a significant difference in terms of reducing business expenses, particularly in the area of tax savings.

With offices in New England and Buffalo, PBS and MS Consultants provide services nationwide (last year, they provided services in 42 states). The New England branch is located in Hampton Falls, New Hampshire. Director of Business Development Jeff Hiatt said, “We’re proud to say that we are one of the largest independent providers of cost segregation studies in the U.S. and our business is continuing to grow.” Founded in 1996, MS Consultants has completed more than 6,000 studies resulting in more than $200 million in tax deferrals last year alone.

 

DD Cost Segregation Chart

DD Cost Segregation Chart

Cost Segregation Studies

Through cost segregation studies, MS Consultants help clients accelerate tax depreciation deductions and reduce taxes new and existing buildings they own thereby maximizing a property’s financial return and generating sizeable cash flow savings. Unlike most other companies doing cost segregation, MS Consultants are engineering-based. The staff includes degreed engineers who know where to look and what works in terms of identifying areas for accelerated depreciation.

The IRS default depreciation schedule subjects many commercial buildings to a 39-year depreciable life, but recent changes allow for certain costs to be classified as personal property with a 5, 7, 10 or 15-year depreciable life. Typically, by following through on a cost segregation study, for every million clients have spent on a building, they will reduce their income taxes by $50,000 to $60,000. To give you an idea of what kind of savings you can expect, MS Consultants offer no cost, no obligation estimates of savings upfront.

Cost Segregation Studies can be applied to both new and existing buildings, According to MS Consultants, new buildings under construction, existing buildings undergoing a remodel or expansion, buildings placed in service as far back as 1987, or franchisees who have made leasehold improvements can all realize considerable depreciation deductions.

MS Consultants have been working with Dunkin’ franchise owners for nearly 10 years and have provided services to about 400 shops. This experience provides a knowledge base that gives them a true leg up on the competition and, due to the sheer volume of Dunkin’ clients they have, typically a Dunkin’ franchisee will pay 20 percent less for services than franchisees from other systems.

MS Consultants have found that, for Dunkin’ franchise owners, usually 40 percent of building expenditures can be reallocated and written off in faster depreciable lives. Further, Dunkin’ franchisees typically get a very high return on their investment in these cost segregation studies, realizing a minimum of a 5-to-1 exchange: for every $1 spent on the study, they get back a minimum of $5 in tax savings.

“We enjoy working with Dunkin’ franchise owners and are pleased that we’ve been able to help so many of them achieve marked savings and improved profits,” said Hiatt. “Having worked with so many Dunkin’ franchisees is a huge advantage when it comes to serving new Dunkin’ clients because we already know a lot about the brand.”

MS Consultants can also advise how to write off parts of a building that are literally being thrown away in the remodeling process (e.g., signage, shelving, chair rails) or in a scenario where you have an older HVAC system that fails and has to be replaced, MS Consultants can show you how to write off the old system. These tax savings are above and beyond those achieved through accelerated depreciation of the building and can double or triple the value of the cost segregation study. What’s more, if you ever need it, MS Consultants provide full documentation and audit trails as well as free support in the unlikely event of an IRS audit.

Energy Management/Going Green

From cost segregation, PBS and MS Consultants moved into the realm of energy efficiency and green consulting to help clients become more environmentally efficient while improving bottom line profits. PBS and MS Consultants are well acquainted with the best and most efficient equipment as well as the tax deductions, credits, rebates and incentive programs available. Ultimately, the savings you can realize in this arena not only impact your taxes but also your everyday energy expenses.

“Moving into energy management was a natural evolution for us,” said Hiatt. “We’re always on the lookout for more creative and innovative ways to save clients money, and helping them to manage utility costs and improve energy efficiency has proved to be fertile ground for real savings.”

The first step is to help you get a real picture of your energy usage by analyzing consumption over the past two years. Through this process, you will see precise patterns of energy usage and truly understand how you are consuming gas and electric power. PBS would then advise you about ways to reduce your energy consumption, only recommending those solutions that will improve bottom line profits. In many cases, through tax incentives and credits, utility company programs and power purchasing agreements, you can implement new, more efficient equipment and technologies with little or no out-of-pocket investment. PBS can also analyze your buildings to ensure they are as energy efficient as possible and identify problem areas leading to a plan for reduced consumption.

Once you have worked to reduce usage, PBS will help you participate in reverse energy auctions where gas and electric suppliers bid down your utility rates. By bundling usage purchases for you alone or combined with other clients, you become a desired customer for the big utility companies capable of receiving more competitive rates. At the DDIFO members’ meeting on September 22nd in Worcester, one of the recent auction participants mentioned that so far this year he has saved $20,000 on utilities across all of his shops. It’s relevant to note we’re only nine months into the year and that this franchisee expects by year’s end to be closer to $30,000 in savings.

“It’s been a true pleasure to work with Dunkin’ franchise owners and to see the tremendous savings we can help them achieve,” said Hiatt. “Especially now through our relationship with the DDIFO, we’re eager to help even more Dunkin’ folks moving forward.”

Whether you’re looking to accelerate depreciation on your buildings, cut your energy usage and related costs or identify a myriad of other ways to reduce business expenses and increase profits, PBS and MS Consultants can help. They know how Dunkin’ Donuts shops operate and are ready to put their track record and experience with the franchise to work for you. Please contact Jeff Hiatt toll-free at 888-989-0054 or jdh@revenuebanking.com.

You can also read more about the companies at www.revenuebanking.com or www.costsegstudies.com.