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Roles of Franchise Brokers and Consultants

Written by: Bob Richman

Article Overview: Should I use a Franchise/Business Broker in My Search? What About a Franchise Consultant? Finding the perfect franchise or business opportunity can be a daunting task -- there are literally thousands from which to choose and all (according to their web sites) are the opportunity of a lifetime.

Roles of Franchise Brokers and Consultants

Should I use a Franchise/Business Broker in My Search? What About a Franchise Consultant?

Finding the perfect franchise or business opportunity can be a daunting task -- there are literally thousands from which to choose and all (according to their web sites) are the opportunity of a lifetime.

You can get help in your search for the perfect franchise or business opportunity in the form of franchise/business brokers and franchise consultants. They can help identify opportunities that fit your needs and goals, decrease your research time, and guide you through the process. Expert advice can be invaluable, especially if this is your first time (which is why Franchise Genius is here).

Having said that, it's really important to know your consultant's business model. Their ultimate goal is to sell you a business. Manage them properly and you'll both be happy in the end.

Franchise/Business Brokers

Franchise/Business Brokers are very much like real estate agents. They list businesses for sale, promote the business to generate qualified leads, and help the business owner set an appropriate price. They represent, at least initially, the business owner. While they may have several businesses listed at any given time, giving you more choice and leeway, they receive a commission when they sell a business.

There are several benefits to the experience and expertise of a broker. First, they learn about you and your needs, presenting opportunities that match your lifestyle, interests, and financial goals. This can narrow the search considerably, saving you time and money. Second, they can be excellent information resources, providing names of franchise attorneys, area demographics, and key contacts within an industry. Tapping into their Rolodex can help you in many ways both during the process and down the road.

Keep in mind that the ultimate goal of a franchise broker is to sell a business. Most are very good at finding a balance between the needs of owners and prospects, but be aware that the sooner you sign, and preferably with a business that they have listed, the sooner they make their commission.

Franchise Consultants

Franchise consultants offer many of the same services as brokers, though business brokers, by definition, will help you purchase an existing business. Consultants, by contrast, can help you evaluate any business opportunity, particularly franchises, whether it is currently operating or not.

Franchise consultants are more likely to be paid on a fee-basis rather than a commission. They are more like a purchaser's representative, helping you to narrow your search, ask the right questions of the right people, and helping you evaluate your franchise agreement.

A consultant should have an understanding of the reputation of a franchise system within its industry and help you to ask the right questions so that you get an understanding too. They can also help you with financing options and navigating the waters of signing with a franchise company.

Hiring an independent expert can be a good move for anyone looking to own a franchise or purchase an existing business. It's a big decision, one with risks and, for most, first-time/one-time purchasing skills (a single-unit operator with no experience only has to go through the real estate process one time). Their experience can speed your time to market and therefore help you recuperate your costs sooner. They can also offer you more choices, tailored to your needs and goals.

To get the most out of your external expertise, you need to manage them like you would any other employee. Be clear in your goals, set expectations and time lines, and focus on what is important to you, not necessarily what is most expeditious for them. The result should be less work for you and a more rewarding fit with your new business.

Related Articles
  Why Use a Franchise Consultant?
  Why Franchisees Should Consider Using a Franchise Broker
  FRANCHISE BROKERS vs FRANCHISING CONSULTANTS
  Finding a Franchise
  Internet Marketing in 2008

Article Tags: business broker, business brokers, business model, business owner, businesses for sale, daunting task, expert advice, financial goals, franchise attorneys, franchise broker, franchise business, franchise consultant, franchise consultants, information resources, leeway, lifestyle interests, opportunity of a lifetime, real estate agents, research time, rolodex



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Why pay a Consultant? - Consultants can bring you into contact with a Funding Source but how do you tell whether a consultant will be successful beforehand? Professional Consultants ALWAYS ask for some kind of retainer so that they can feel they're not being used by a 'chancer'. However, when raising funding, a real consultant will offer to REFUND THAT RETAINER out of the % BROKERAGE he charges, payable once he finds your Funding Source, and payable from initial disbursements. Retainers only cover part of the costs that a consultant has to pay while working on behalf of the Client. Their real wages come from the agreed upon Brokerage, received when they are successful on the Client's behalf.
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how much for a franchise fee? - Dear Colleague There is no easy answer to this question. Things to consider: [list=] The sizeof the Franchise Clent base Expected Turnover Intellectual Property costs (recoup) Number of Franchises Number of employees Original Set up costs Franchise admin costs An example: A franchise that I was involved in setting was to a simple "lawn mowing/home repair" franchise. The Franchise included national/local advertising - preparation of client lists - general admin - central accounting etc The Franchise involved 300-500 clients - and an annual turnover of about $300,000 . The annual franchise fee was $30,000. Hope that this gives you some idea Take care Ian[/list]
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