What to Expect When Working with a Franchise Broker

Diving into the franchise world can be extremely daunting, especially if you’re a first-time business owner or don’t have a specific industry in mind. To complicate matters, there are so many franchises to choose from. According to the International Franchise Association, there are more than 3,000 officially recognized franchise brands worldwide. So, where do you start?

Franchise brokers, also known as franchise consultants or franchise coaches, exist for precisely this reason. They help guide investors through the crowded franchise landscape to find the perfect fit.

The International Franchise Professionals Group describes a franchise broker as someone who counsels people who are considering franchising. They guide candidates through the selection, evaluation and buying processes. Franchise brokers are commonly compared to real estate agents. Their purpose is to educate candidates about the franchise process, assess franchise opportunities and refer candidates to a specific franchise.

“It’s a huge educational process,” said Emily Anderson, a FranNet consultant. “Most people don’t know franchising, so it’s a huge win for me when I can get them to think beyond the $5 footlong and the golden arches, and I see the lightbulb go off when they realize what’s possible.”

Franchise companies hire brokers to sell franchises for them, so the franchisors and the franchise candidates are considered clients. Brokers either work for a network or for themselves and represent a set number of franchises trying to find the best candidates.

Franchise brokers have different methods for matching candidates with their ideal franchise. Most of the investigative process, however, is done the old-fashioned way, asking questions via phone or in-person meetings. Aside from fundamental questions about finances, geographic preferences and professional history, brokers will dig a bit deeper to truly understand why their client is interested in franchising at all.

“It’s a lot of fun to learn about what makes people tick and then use that to find a good franchise fit for them,” said Adrienne Leigh of Success Franchising. “Plus, this whole process is designed to be a precursor to the franchisor’s process, so it’s really important to guide people through and make sure they understand what to expect.”

Once the broker has a better understanding of the candidate, he or she will start the search process to find the best franchise match. The broker and candidate will review options together and gradually filter down the list. Once it’s narrowed down to the final few, the broker will facilitate discussions between the franchisor and the candidate to move things along to the next step, all the way through to signing. This usually includes walking a candidate through the Franchise Disclosure Document (FDD) and the Franchise Agreement (FA). The process repeats and continues until there’s a match.

There is no difference in cost to the candidate for working with a franchise broker versus going to the franchise directly. Brokers are paid on commission from the franchisor once a sale is complete. These commissions vary. Some are based on a percentage of the franchise fee and others are a flat rate. It just depends on the arrangement with the franchisor.

The most obvious benefit of working with a broker is they help you weed through the thousands of franchise options, saving you huge amounts of time and energy. If you have preferences on industries and territories, a broker can also tell you whether those preferences are realistic, preventing you from wasting your time.

As with any profession, some brokers are better than others, and the franchises they represent will vary. Some may represent larger, more well-known brand names, and others may have a portfolio of smaller, mid-range franchises. It’s usually in your best interest as a candidate to talk to multiple brokers so you can cast a wide net and make sure you’re seeing all of the options.

Regardless of what franchises they represent or how many matches they’ve made, most brokers can agree on one thing: helping their candidates find the perfect franchise is the ultimate reward.

“Seeing a candidate who is now very successful is a huge win to us,” said Jack Armstrong, a FranNet consultant. “They’re very happy with their decision. They may be expanding to other territories. They may even start sending us referrals. I always feel great when candidates come back and say it was the best thing they ever did.”