Franchise Brokers 101: Who, What and Why?
Buying your own franchise may appear to be pretty easy. After all, the franchisor basically tells you what to order, how to set up your business, and in many ways, how to run it. They provide training and equipment and sometimes even help you find the right location. There are thousands of options and having a franchise broker can help you find the franchise that works well for your particular situation.
What is a Franchise Broker?
Essentially, a franchise broker is someone who connects a potential franchisor (one who permits a franchise) to a client. The broker can represent anywhere from one to hundreds of franchises and meets with clients interested in buying a franchise to discuss their various questions, needs, and abilities. There is a discovery process where the broker should fill out intake forms and get an understanding of the client’s values. Once the broker has a good idea of what the client wants, they are able to provide different options. Clients work with them along the way and choose the franchise they would like. The broker then helps clients fill out the application and acts as a mediator between them and the franchisor until the sale is finalized.
Is it Really Worth Hiring a Franchise Broker?
You may be the type of person who loves staying up all night researching online. You may find that you would prefer spending time instead of money to find the best franchise for you. And you could probably be successful! Honestly, evaluating how much time or money you are willing to give is an important step in this process.
Even though you may have a good idea of your strengths and weaknesses, an experienced broker will be able to tell specifically how your attributes can lead you to either contribute well or fail in various franchises. Because of this, a broker can be an extremely important help in finding the perfect franchise for you. Just make sure it is the right broker. Hiring the perfect broker is worth the extra money. Getting a less experienced or slightly shady broker may be less expensive, but if you are serious about buying a franchise, finding the right broker is one of the most essential parts of the process and will probably save you money in the long run.
Do Your Homework
If you do decide to hire a franchise broker, make sure you have a good grasp on their character. You will trust them with a lot of information- financial and otherwise. Many people are turned off by the idea of hiring a franchise broker because most of the broker’s income is based on a cut from a franchise sale. A dishonest and rash broker would try to push more expensive options instead of offering a thoughtful and customized plan. That being said, don’t be alarmed. Most brokers want good, lasting relationships with the franchisor. When a client buys a franchise based on this tactic, and not on an individualized plan, there are usually problems. Some franchises end up closing after just a few months. The franchise itself is hurt and the broker is held largely responsible. A broker has every incentive to really dig deep into a client’s vision because the client’s success leads to the broker receiving more business.
A good broker will ask you a lot of questions. They need to know almost everything about you: income, interests, strengths and weaknesses, good and bad experiences in business, time commitments, budgets, and more. If they are not asking questions, they are not worth working with. With so many franchise options, you need a broker who will work with you to find the perfect few options. You also need to be able to work with someone whom you feel safe confiding your dreams. This franchise will be one of the most important business decisions, and it is essential that they understand your vision.
You also need to ask a lot of questions about their experiences- both successes and failures. If they have been in business for a few years, how many clients have they had? How are their clients’ businesses doing? They should gladly be willing to answer and be willing to share stories about people who had similar situations as you do. This shows that the broker is experienced, has a good reputation, and is devoted to improving themselves.
A Final Thought
Because the Internet can essentially introduce you to millions of franchising opportunities, you may find that there are simply too many options. Having someone represent a fraction of those companies is helpful in organizing options. A broker is simply going to ask you questions that you had not considered. It can be a good test to see if you really are up for buying a franchise. Brokers realize that it costs a lot of money and that you will be spending months setting up a business without getting an income. They know clients’ hesitations and because of that, they have ideas on how to address your specific concerns.