Have you spoken to a franchise broker? Do you know how they are compensated?
Understand the differences between a franchise broker and a franchise consultant. Full article here: https://www.vettedbiz.com/franchise-broker-vs-franchise-consultant/
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Many entrepreneurs that are looking to buy a franchise often ask, what’s a franchise consultant? What’s the difference with a franchise broker? Which should I work with? So in today’s video, I’m gonna address the three types of categories that basically encompass franchise consultants as well as franchise brokers.
So the first one is a franchise broker. This is an individual or a firm that might represent anywhere from 2 or 1 to 400-plus franchises. Generally, a franchise broker is solely compensated by the franchisor as a percentage of the franchise fee. We’ve seen fees being compensated to franchise brokers that range anywhere from 20% to 70% plus.
They are generally only compensated if a candidate that they present moves forward and invests in a franchise with that franchisor who’s paying the commission. Many of the franchise brokers receive little training and are generally more…many franchise brokers have very strong sales acumen, but at times, they do not receive great training in terms of really understanding the different franchise opportunities, as well as different industries. A franchise broker might be well specialized in one or two industries based on his or her prior career experience. But at the end of the day, they largely operate as a one-man show where they’re part of a larger network of…where they’re part of a larger network of…where they’re a part of a larger franchise brokerage network where they have contractual… a franchise broker might be part of a larger network, where that network has negotiated referral contracts with 100, 200, 300, 400 franchises. So the franchise broker essentially is only compensated if a candidate he presents invest in one of those franchises.
Many of the franchise networks that we are aware of do not do a very good job in terms of vetting what franchises they create partnerships with so that their brokers can go out and sell them. There are a lot of emerging brands that haven’t even proven themselves, and maybe have 1 location, 2 locations, and they’re looking to sell 50, 100 locations in the first year. At times, these franchise networks do not do a great job in terms of vetting the different opportunities… So, it’s important to talk to someone that presents themselves as a franchise broker or a franchise consultant, how are they compensated? And if they only are compensated by their franchisor, what’s to stop them from presenting the most lucrative franchise option to you that is gonna earn them the most money and not necessarily earn you the most money?
So the second category are franchise consultants that focus on franchisors as clients. Generally, these franchise consultants work with businesses that might be well suited to a franchise model. So they’ll work with a franchise attorney, operations manual consultant, as well as all different other parties to basically create a franchise system for an emerging business. Franchise consultants that have franchisors as clients might also help with recruiting, marketing, and other facets to help the franchise system grow.
The last type of franchise consultant are those that are really focused just on franchise buyers. Vetted Biz and Visa Franchise offer solutions to both Americans and foreign nationals that are interested in buying a franchise where you engage our services. And we can look at any franchise available at the time of this video on our portal, vettedbiz.com. We have 1830 franchises. We seek to add another 200 this year, as more and more franchises become publicly available. And we’re able to take the most pertinent data and you can search through it on our platform.
How it generally works with franchise consultants that work directly with franchise buyers is the franchise buyer after initial consultation, will engage the franchise consultant to do a study anywhere from two to three weeks and arrange all the phone calls with franchisors, franchisees. If they need to arrange calls with the franchise…
Full article here: https://www.vettedbiz.com/franchise-broker-vs-franchise-consultant/