Franchise Brokers Vs. Franchise Consultants – Distinctions With a Difference
The terms “franchise broker” and “franchise consultant” are seen frequently in the press, often implying they are one and the same. But what is a franchise broker and how are they different from a franchise consultant. Do they both offer objective, impartial advice? This article answers these critical questions.
A franchise broker is a paid franchise salesperson. Many franchise brokers claim they will help find a franchise company that is the perfect match for your background and abilities, and that their service is free. In the beginning it all sounds good. There’s some personality testing and review of personal finances. At the end of the day, it turns out they only represent a handful of small franchise companies you’ve never heard of before. A detailed analysis often reveals these highly touted franchises produce mediocre or even below minimum wage financial performance. Yet franchise brokers don’t mention this, and individuals continue to rely on their recommendations, believing the broker represents them. Nothing could be further from the truth.
Franchise brokers receive a substantial commission up to 50% or more of the franchise fee you’re paying the franchise company. Franchise Broker Realities: (1) Their service is definitely not “free” despite these and other similar misrepresentations. It’s really common sense – how could anyone offer a “free” service and survive in business? The simple truth is if you buy one of the franchises they’re hawking, your money goes to the franchise company, then into the broker’s pocket. If anyone ever calculated how much time they spend to collect their $15,000 or $20,000 commission, it’s probably more than a brain surgeon earns. (2) Franchise brokers definitely do NOT have your best interests in mind. They will do or say whatever they have to in order to close a deal and earn their commission.