The Pros and Cons of Using Franchise Brokers

Anyone exploring franchise opportunities has most likely heard of or considered working with a franchise broker. With over 3,000 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. Still, for the franchisor, there are several pros and cons to working with franchise brokers, which is why consulting companies like Raintree* can offer a balanced approach.

The Pros

Essentially, brokers are experts on franchise opportunities in the marketplace and are able to tailor a potential franchisee’s options based on their interests and values. This makes the overall experience of looking for a brand to franchise with less daunting. Their services are also helpful for the brand, as they can filter out any buyers who are simply browsing and  who are not serious about their investment — or not qualified to make one, for that matter. 

“The benefits of working with brokers, unlike many sales organizations, is that they bring franchisors very qualified prospects,” said Linton Dowling, marketing director at Raintree. “They’ve met with them and really understand their needs as a franchisee. On the other side, the best brokers understand the quality traits that the brand is looking for in an ideal franchisee. These candidates will meet all requirements, such as availability, location and financial prerequisites.”

The Cons

Franchisors need to understand that the role of a good broker is to introduce qualified leads to the brand. Once the introduction is made, it’s the franchisor’s job to sell and to take the candidate through a well-developed discovery, sales and closing process. There’s no point in generating a ton of qualified leads if you don’t have capable individuals to guide them through to the finish line. Raintree’s franchise sales experts are experienced and highly skilled in the art of franchise recruitment, and they have the track record to prove it.

“With brokers, franchisors will have to pay more — the commision rates that broker networks require take a significant amount of the franchise fee from the brand,” said Dowling. “Therefore, it impacts the ability to inject capital into other important processes, such as real estate, construction, training, marketing and support. Raintree offers a program that requires a significantly smaller commision rate and allows brands to reinvest in their franchise owner. The franchise fee is not a revenue-generating source — it should be redirected into important projects. That is why a franchise development program at Raintree offers significant advantages.”

Raintree offers brands an omni-channel approach to franchise development that incorporates robust inbound and outbound marketing strategies. Quality content is fed to the correct channels, including PR, social media content, digital sales and portals, to intercept qualified buyers to pull them towards the opportunity. Still, brokers play an important role and are required. Creating awareness within the broker networks, Raintree handles all communications and vital relationship-building so franchise brokers understand the opportunity and feel confident in presenting brands to their clients. 

The Future

Everyone is impacted by COVID-19, and Dowling notes that it is important to educate brokers and brands about the long-term benefits of their relationship. “This pandemic isn’t going to last forever, and we are encouraging brands to look at the big picture,” he said. “Brokers are suffering just as well as brands, and it is our job at Raintree to better educate and take the time to share stories and best practices. We know that 2021 will be one of the biggest years for franchising in recent memory, and this is a time to reeducate brokers and brands about franchise development.”

While there are many pros and cons to using brokers, Dowling notes that the most important thing to remember is that it is never wise to put all of your eggs in one basket. “Instead of relying completely on brokers, the best sales and marketing strategy utilizes bits of every program and figures out what works specifically for the brand,” he said. “Brokers are great, but Raintree’s integrated, omni-channel approach can position franchisors for further success in a post-COVID world.”