Finding the Right Franchise Opportunity: Using Franchise Brokers

Anyone exploring franchise opportunities has most likely heard of or considered working with a franchise broker. With nearly 4,000 franchise brands in the U.S. recognized by the International Franchise Association, the current landscape can make it difficult for prospects to know just which brand they should be investing their capital in, creating the need for an industry expert to serve as a guide for prospects. This role is filled by franchise brokers — intermediaries who function as a matchmaker of sorts for franchisors and franchisees. 

“There are thousands of franchise systems out there, so having someone who can help candidates do the proper research and gather data is a big part of the due diligence process,” said Corey Elias, founder of Franchise Captain, an Atlanta-based  franchise brokerage. “Brokers know all the systems out there, and we have back-end data on what those systems look like and can ultimately help people narrow down and find the franchises that will be the right fit for them.”

To accomplish this task, the broker will get to know each candidate and assess what interests them, what skills they bring to the new business, and what their goals are. 

“I worked with a coach at FranConnect during my due diligence process,” said David Houck, who signed on as a Home Clean Heroes* franchisee last year after decades in the banking industry. “He walked me through a series of conversations about my strengths, my weaknesses, my passions. It really helped me put into words what gets me out of bed in the morning, and we developed a great friendship.”

With this assessment, an experienced broker will be able to funnel down the 4,000 opportunities into a much smaller sample size of franchises to share with their prospects by fully understanding someone's buyer values. “Buyer values can be best described as a wish list,” said Charlie Bever, CFE, Senior Franchise Consultant with The Entrepreneur Authority. “The wish list is everything that is important to the prospect.”

In addition to helping candidates develop a clear understanding of their specific entrepreneurial goals, brokers offer decades of experience working in the franchising industry, which can be an overwhelming industry for those without any experience. 

Adeola Shabiyi, a Nigerian-born entrepreneur with a doctorate in business administration, says working with a franchise broker was essential for his process as a first-time franchisee with Home Clean Heroes.

“As a professional myself, I generally advise people to work with other professionals,” said Shabiyi. “If you have a legal issue, you work with a lawyer. If you have a medical issue, you work with a doctor. If you want to buy a franchise, you work with a broker who has in-depth knowledge of that world and the respective franchises you may be considering. That way, they can guide you appropriately and handle a lot of the heavy lifting for you.”

Elias also said that there’s another benefit of working with a broker: “Brokers also have access to funding resources, franchise attorneys, accountant introductions and tools to look at the back-end health of a franchise system.”

While franchise brokers usually earn a commission from the franchisor when they sell a franchise unit, Elias says it is important to remember that franchising is a highly referral-based business, which means brokers are incentivized to create great matches.

“My last 30 clients have signed on with 25 different brands — I’m not just recommending the same brand to everyone,” said Elias. “It requires a lot of digging to understand the individual’s goals and pair them with the right brand based on a whole slew of factors — we leverage our real world experience to help prospective franchisees better evaluate the systems, the FDDs and the red flags. I own three businesses myself, so I understand ownership. Having that experienced guidance is priceless.”

And just like vetting a franchise opportunity, entrepreneurs should do their research on the specific broker they are considering working with. 

“Not all franchise brokers are the same,” said Bever. “If someone is considering working with a franchise broker, the broker should be a Certified Franchise Executive (CFE), should have experience as a franchisee and/or working for a franchisor, should have a minimum of 10 years experience in the industry, should be regularly quoted in franchise publications and should have a physical office to meet with their clients.”

Overall, Bever says the very best franchise brokers capture and understand their candidates’ buyer values and then match their values against what the franchise offers. “This is a very important step that is often missed or not utilized by inexperienced franchise brokers,” he said. “They rely on their hunch only and this will only yield disappointment for the prospect and the broker. The best franchise brokers are a ‘coach’ — someone who is debriefing with the prospect all throughout the franchisor's discovery process. Providing the prospect with knowledge and firsthand experiences, and being a one-stop-shop for them for resources while they complete their due diligence is key. That is why it is just as important to do your research when selecting a franchise broker.”

By partnering with an experienced and respected franchise broker, first-time franchisee candidates can start their journey towards entrepreneurship the right way, guided by an expert hand in the field. 

“If you find a good consultant in the beginning, you can be confident you are setting yourself up for success in the future,” said Shabiyi. “That is the main value brokers bring to the table — they help you find the best business so you can be the best franchisee possible.”