Buying into a franchise is a big financial commitment. And the whole process can be stressful and at times overwhelming. That’s where franchise brokers come into play. Franchise brokers can help match the “right” franchise for you.
Who is a franchise broker? What do they do? And, is a franchise broker right for you? If these are some questions you’ve asked yourself, read on for more information.
Who is a Franchise Broker?
A franchise broker is a consultant whose job is to vet all franchise opportunities available to you, narrow down your options, and help you avoid mistakes most prospective franchise owners make. In a nutshell, a franchise broker is a franchising expert who leverages their industry expertise to help you navigate your franchise purchase.
They go by many names, including referral sources, franchise advisors, business coaches and franchise consultants. A franchise broker is a paid by the franchisor. They receive 40% to 50% of the franchise fee. This transaction occurs only when a franchise candidate (you) makes an actual purchase.
Do You Need a Franchise Broker?
Technically, the answer is no. However, most franchise brokers are well versed in the world of franchising. They know the ins and outs of most franchises. This insider knowledge and expertise is extremely useful when it comes to negotiating and choosing the perfect franchise opportunity.
The Benefits of using a Franchise Broker
Know Your Choices – If you are totally new to franchising, a broker will be able to assist you and help furnish all opportunities available that match your criteria.
Saves You Time – There’s a lot of back and forth that goes into buying a franchise. You have to do a lot of research and sift through cumbersome information and data. A good broker can save you time and help you navigate the selection process beginning to end.
Can Save Money – Investing your money in the wrong franchise can have detrimental financial consequences. A good broker will help steer you in the right direction.
The Disadvantages
Perhaps the only disadvantage of having a franchise broker is that brokers are offered incentives from franchises to suggest certain franchises. A typical commission totals $12,000. To find an impartial franchise broker:
- Do your due diligence
- Ask for recommendations from existing franchisees
- Check the broker’s credentials and ask for references
