The best franchise consultants create a good match between franchisor and franchisee.
While over 50 percent of initial leads come to franchisors via the Internet, referrals from social and professional networks, a significant percentage are generated by franchise brokers and consultants.
It’s critical for a franchisor to align with a broker who has a good reputation in the franchising industry. The best brokers act as true consultants. They are committed to helping potential franchise buyers succeed, and they enjoy the personal interaction of coaching and educating a franchise prospect. They generate and nurture solid leads and are committed to finding a good match between franchisor and franchisee.
Since 2010, brokered franchise deals have remained steady, accounting for anywhere between 14 and 17 percent of sales of franchise units. These numbers include the nation’s entire pool of over 3,000 national franchisors and also include companies that don’t use brokers. Franchisors that take advantage of franchise broker services typically report much higher numbers. For example, many of IFPG’s franchisor members say over 50 percent of their deals originate from brokers.
According to the 2015 Annual Franchise Development Report, a highly-regarded survey published by Franchise Update, franchisors expect to close an average of 11.3 deals through broker firms and 8.3 deals through independent brokers/consultants in 2015.These numbers are likely to remain stable in the foreseeable future, and that means it’s in the best interest of many—if not most—franchisors to consider developing strong relationships with franchise brokers.
Here are four reasons why franchise brokers will remain an important player in franchise sales:
1. They’re a great source for ‘hidden’ buyers
A motivated prospect often heads to the Internet to research franchise brands and will proactively approach a franchisor, armed with well-researched questions. But some potential franchise buyers just aren’t that far along. They might have a vague notion that business ownership is a good fit for them and need the coaching and support a broker/consultant offers. Franchise brokers shine when it comes finding these “hidden” qualified buyers. By the time the broker brings the candidate to the franchisor, the candidate has decided on franchise ownership and is primed to move forward.
2. They pre-screen franchise prospects
A great franchise broker creates trust and gets to know prospects on many levels. They find out about their preferences, character traits and specific skill sets. Importantly, the broker knows the franchise prospect’s financial standing and won’t irresponsibly pass along a candidate who’s not financially qualified.
The bottom line: Many franchise prospects that’ve been through a pre-screening process with a broker end up as success stories and top achievers. Franchisees who fail are typically those who weren’t a good fit for a franchise to begin with. The best franchise brokers are experts at making sure the franchisor and franchisee are a good match.
3. They excel at selling service franchises
Franchise brokers are particularly effective when it comes to affordable service franchises. Think mobile, home-based and office-based franchises as opposed to concepts with super-high investment levels such as restaurant and retail. If you are a franchisor in this category, it’s important for you to explore using franchise brokers as a part of your lead generation strategy.
4. They can lower operating expenses for emerging franchises
Brokers are often critical for emerging companies that are in their first few years of franchising. That’s because they can lower operating costs such as sales payroll, marketing and advertising. By using brokers and the pre-qualified leads they provide, some emerging franchises have accomplished impressive growth during their startup years.
If you are a franchisor looking to increase sales by working with brokers and consultants, click here to learn more about joining the IFPG for as little as $125 per month.