What TCX's Franchise Consulting Index Reveals About Brokers

Earlier this September, The Consultant Exchange (TCX) published its first annual Franchise Consulting Index. The FCI was built by surveying 220 franchise consultants and brokers across the United States and Canada and asking them to reflect on their success and practices over the previous twelve months. It’s the most complete and ambitious attempt to benchmark how franchise consultants – key allies to both franchise brands and entrepreneurs hoping to transition into franchise ownership– actually work and think.

Franchise broker performance

Any discussion of the FCI should begin with the report’s headline finding: Not all franchise brokers are created equal. The most active 20% of consultants account for 63% of all franchise unit placements over the last year. The top 10% alone placed 43% of units. In fact, the majority of consultants who responded to TCX’s survey placed four or fewer candidates in the yearlong reporting window.

If you’re a franchise brand, the clear takeaway here is that you need to be working with top-achieving consultants and brokers to reliably achieve your development goals. As everyone in franchising knows, it’s not just about the number of placements, either; quality plays a major role in the potential success of a new franchisee. That top performing broker cohort was also much more likely to recruit candidates willing to invest over $250,000, which shows that the most productive consultants are generally who’s working with the most desirable recruits.

On the other hand, if you’re a franchise consultant, these results should be a gutcheck. If you’re in the 75% of brokers who placed four or fewer franchise candidates last year, your long-term success in this space depends on breaking into that Top Achiever tier quickly.

So, what can the best teach the rest? We asked the report’s author Steven Inglefield, and he said two habits of top achievers stood out to him:

> “First, top performers spread their placements across more brands rather than concentrating on one — their average share going to their single most-placed brand was 22%, versus 32% for everyone else. They’re not riding one relationship; they’re building a portfolio. Second, they spend more on lead generation — the median for top performers was $3,000 a month versus $1,500 for the rest of the field — but the more interesting finding is that at the same level of spend, they still place more per dollar than everyone else. So, it’s not just that they invest more. They convert better at every level of investment. That’s not something a bigger budget alone fixes — it points to something in how they work, not just what they spend.”

Franchise system support

We’ve already said that not all franchise consultants are created equal, but it’s also true that not all franchise systems are created equal when it comes to helping brokers help them.

Franchise consultants have many responsibilities, and the FCI uncovered that one of their most important roles is that of heat shield, or as TCX put it, “an informal protection barrier,” for entrepreneurs seeking placement. 88% of brokers who responded to the survey indicated that they have avoided working with a brand due to their compliance status, litigation history, or financial instability.

Franchisors with those kinds of issues are too hard a sell, and in an environment where franchisee failure stories are increasingly weaponized against the industry, no broker wants to be part of connecting an entrepreneur with an opportunity they don’t believe in themselves.

That means, if you’re a franchise brand, you really do need to protect your reputation and do business the right way if you want to work with high-achieving consultants who can take your system to the next level.

The main thing consultants in the survey are looking for from franchise brands is clear, responsive communication from development teams. 84% of consultants said they increase engagement with brands when their development teams and processes are strong, while 43% of respondents said they have decreased engagement with brands due to flawed development teams and processes.

Again, we asked Steven from TCX how franchisors should receive that news, and he indicated that this is an opportunity for brands to look on the bright side and see a fixable issue:

> “I’d want franchisors to read that finding as good news, honestly, because it’s the cheapest problem in the entire report to fix. It’s not about your unit economics or your franchise fee. Seventy-one percent of consultants who gave a reason for pulling back from a brand pointed to the development team — and when you break that open, the single largest piece of it is simply communication and responsiveness, not competence or conduct. And it shows up on the other side of the same question: when we asked what a franchisor could do to earn a consultant’s long-term support, 73% said some version of “be responsive, communicate, follow up.” That’s not a strategy problem. That’s a discipline problem, and it’s solvable this week, not next fiscal year.”

Education and standards

Franchise brokers help guide entrepreneurs toward opportunities that are strong fits for them and away from flawed franchise systems. A huge part of that piece is education. In fact, the FCI report indicated that most potential franchise candidates come to brokers without a clear understanding of what they’re potentially getting into.

Fifty-two percent of respondents indicated to TCX that candidates misunderstand the risk of business ownership “often” or “very often.” This reveals a major knowledge gap that many entrepreneurs bring to the table with them. Unfortunately, it often goes unresolved, as only 70% of brokers agreed that candidates understand the financial risks they’re taking on before proceeding.

What’s troubling, based on FCI findings, is that consultants may not be educating themselves on the full picture of the opportunities they represent, which ultimately does a disservice to all the stakeholders in the process. Only 38% of consultants indicated they “Always” review a franchisor’s FDD before recommending their opportunity. Brokers are most likely to use information from a brand’s broker portal, website, or development team as they conduct due diligence, but it’s worth mentioning how much that allows franchisors to control the narrative around opportunities.

Franchise Consulting Index report author Steven Inglefield was quick to point out:

> “Consultants’ top three research sources — the broker-group portal, the brand’s own website, and conversations with the development team — all come from the party being evaluated or the network representing it. The one legally required document in the whole process, the FDD, is a top-three source for less than half of consultants, and only 38% say they read it every time. That means the person doing due diligence on a brand, on a candidate’s behalf, is mostly working from information the brand itself controls the framing of. That highlights the importance of the consultant role, when executed at a high level, to fully understand all facets of the brands they recommend.”

Now that TCX has presented their findings, the question remains: How can franchise brokers bring brands and candidates together in a way that builds a better space for all? Generally speaking, the FCI suggests that next step forward involves richer, more consistent research from consultants, a more fully-informed candidate pool, and more focus from brands on transparency and communication.

So, what feels like the biggest single step we could take to improve the ecosystem? Around a quarter of survey respondents said they felt higher professional standards or a certification path would be the most beneficial change to the ecosystem for franchise consultants. When we followed up with Steven Inglefield, he said TCX’s research suggests a better path forward might include a tighter network of high-performing professionals.

> “When we looked at what actually separates top performers from the rest of the field, it wasn’t credentials — it was tenure, how much they invest in lead generation, and how well they convert at every level of that investment. Certification could raise a floor. It’s not obviously the thing that turns a mid-tier consultant into a top performer, because the gap the data shows is closer to experience and execution than to qualification. What the data does suggest “better” might look like: right now, roughly 3,800 people call themselves active franchise consultants, and a meaningful share of that number are part-time or occasional. If registration and certification requirements take hold — and there’s real regulatory movement toward exactly that — the more likely outcome isn’t that today’s mid-tier consultants suddenly perform like top performers. It’s a smaller, more fully professional, better-regulated pool of consultants overall. That’s a different kind of improvement than closing the performance gap — it’s raising the baseline of who’s operating in the space at all.”

The Consultant Exchange plans to make the Franchise Consulting Index a yearly tradition to benchmark the evolution of the industry and broker practices. It will be intriguing to see if next year’s edition reflects a tighter, more professional, more productive broker pool, as Inglefield suggests.