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Franchise Broker vs. Franchise Consultant: Making the Right Choice

In the world of franchising, where opportunities and challenges walk hand in hand, the role of knowledgeable guides becomes paramount for aspiring entrepreneurs.

By Luca Piacentini1851 Franchise Managing Editor
SPONSOREDUpdated 8:08AM 04/17/24

As a prospective franchisee, the decisions and connections you make at the outset of your journey can significantly impact your success and satisfaction in the franchising arena. Two pivotal figures in this landscape are franchise brokers and franchise consultants. Understanding the nuances of these roles and making an informed choice between them can set the foundation for a prosperous franchise venture.

Franchise Broker: The Deal Facilitator

What Is a Franchise Broker?

A franchise broker acts as a middleman between franchisors and potential franchisees. Often associated with a broker network, these professionals are usually compensated by the franchisor through commissions upon the successful placement of a franchisee. Their primary goal is to match candidates with franchise opportunities within their network, focusing on closing deals that benefit both parties.

“The main component of being a successful broker is really just listening to your clients and making sure we understand what their goals are as a business owner as we transition them into being that and really trying to figure out what they're what they're looking to accomplish,” said Katie Small of FranNet.

Pros and Cons

Pros: Brokers can simplify your search by presenting pre-selected options that match your investment level, interests, and desired location. They offer a streamlined path to franchising, making the process less overwhelming for newcomers.

Cons: Since brokers are commission-based and represent specific franchises, their suggestions might not fully align with your best interests. Their portfolio is limited to the franchises they represent, potentially narrowing your scope of options.

“Brokers usually disclose how they are paid, but they don’t talk about how much they are getting paid,” Chuck McKinney, principal at Franchise Connection Partners, told 1851. “In the senior care industry, for example, some franchisors pay industry standard — about $24,000 per placement — but some franchisors pay almost twice that much. Why? They are trying to buy a bigger share of the marketplace since it is so popular right now.” 

Brokers may also encourage candidates to consider larger franchise packages, such as three packs, five packs, ten packs or even twenty packs. This is because when the total cost of the franchise investment increases, their commissions also rise.

McKinney says recognizing and understanding these financial motivations can help build trust between the broker and the franchisee.

“There are some brokers who discuss the commissions they are getting, and others who don’t,” said McKinney. “I am always willing to tell people how much I am going to get paid. If you want to ask me, I'll tell you. I know why I am presenting this brand to you, and it's not just about the paycheck.” 

Franchise Consultant: The Strategic Advisor

What Is a Franchise Consultant?

A franchise consultant, sometimes referred to as a franchise advisor, provides expert advice and guidance on franchising. Unlike brokers, consultants are often paid a consulting fee by the prospective franchisee, which allows them to offer unbiased recommendations. Their services encompass a broader spectrum, from selecting the right franchise to navigating the franchising process and strategic planning.

“The biggest function the franchise consultant serves is to weed out the noise,” said Bill Luce, president of Transworld Business Advisors. “A lot of times, people who are looking to buy a franchise generally don’t know exactly what industry they’re looking for and certainly don’t know what specific company they’re looking for. And the search, frankly, can become pretty daunting.”

Pros and Cons

Pros: Consultants offer personalized advice tailored to your unique needs, goals, and circumstances. They provide a comprehensive view of the franchising world, including opportunities outside their immediate network, ensuring your decision is well-informed and aligned with your aspirations.

Cons: Engaging a franchise consultant requires an upfront investment, which might deter those with limited resources. Additionally, the quality and effectiveness of the consultation can vary significantly based on the consultant’s experience and expertise.

Making the Right Choice

When deciding between a franchise broker and a franchise consultant, consider your needs, preferences and the level of independence you desire in your decision-making process. If you prefer a more guided approach with a focus on opportunities from a specific network, a broker might be your ally. Conversely, if you seek comprehensive, unbiased advice and are willing to invest in expertise that spans the entire franchising spectrum, a consultant could be the better option.

“Ultimately, it’s like working with any other professional,” Luce said. “Personality, fit and how a process works with a consultant all should come into play.”

The journey to becoming a successful franchisee is fraught with decisions that can shape your entrepreneurial path. Whether you choose to work with a franchise broker or a consultant, the key is to ensure their services align with your long-term objectives and values. Armed with the right support, you can navigate the complexities of franchising with confidence, laying the groundwork for a thriving business that fulfills your entrepreneurial dreams.

Key Takeaways:

  • Understand Your Goals: Clarify your entrepreneurial goals, investment capacity and the industry you wish to enter.
  • Research: Investigate both brokers and consultants, seeking recommendations and reviews to ensure their credibility and alignment with your expectations.
  • Interview Prospects: Engage with multiple brokers or consultants to assess their understanding of your vision and their ability to support it.

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