Franchise Brokers: Should You Hire A Franchise Broker?

Just like a real estate broker helps you buy a house, a franchise broker helps you find a franchise. While franchise broker services were unheard of till the last decade, broker networks are used by more than 50% of all franchisors and account for at least 10% of franchise sales.

According to Wikipedia, franchising is the practice of using another firm’s successful business model. What this means is that you approach a successful business such as Wal-Mart, for example and build a store to distribute their goods. While traditional methods of obtaining franchisees depended on a long screening process conducted by the franchisor and approaching franchisors through trade shows, franchise brokers have changed this to some extent. But why should you really hire a franchise broker?

The first reason is the most interesting – franchise brokers offer a free service. They are paid by the franchisor for getting them a qualified lead, one that they do not require to pre screen.

Second, the broker can match your skills against the available opportunities. Did you know that when searching for franchise opportunities most people inadvertently search for food businesses? This may or may not be the right choice for everyone. Franchise brokers carefully evaluate your skills, background, experience and business goals and present a list of franchise businesses that you are best suited for.

Third, most franchisors do not entertain requests from interested prospects directly because a lot of under qualified people call to inquire about the business and really, when you are running a business you don’t have time to deal with all this. Now, when a broker introduces you to the franchisor, they already know that they are getting a good prospect and will be more interested in initiating business discussions.

Although, bear in mind that while most franchise brokers are pretty altruistic when it comes to client needs, it is easy to get swayed by external factors. It is quite possible that the broker presents you with franchises that offer him or her the highest commission.

Franchise brokers represent a number of franchise companies but there will always be a hundred more to choose from. Hiring multiple brokers will end up confusing you – stick with one, sifting through a list of fifty franchisors can be daunting so why increase the number more?

At the end, remember that brokers are similar to salesmen and their commission depends on you buying a franchise. You may feel that you are being pushed towards a franchisor you have no interest in.

Irrespective of all the cons, the pros of hiring a franchise broker are obvious because they bring with them an expert knowledge of the business. Instead of filling online applications with franchisors, you can directly contact a broker who will present you with a good choice of businesses that will be a sound investment. However, remember that purchasing a franchise from a broker is no guarantee of its success – the success depends on your hard work and effort. But the question really is if franchise brokers really make a prudent choice on your behalf?

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