There Are Many Reasons to Work With a Franchise Broker
Sometimes, the franchising industry can confuse the terms Franchise Broker and Franchise Consultant. This confusion stems from the fact that these terms are used interchangeably depending on the person you’re working with. By definition, a franchise broker is an intermediary between buyers and sellers of franchises. When wearing the consultant hat, they offer advice to prospective franchisees and formulate suggestions based on the candidate’s finances, skills, and experience.
To become a franchise broker, a franchise broker network like IFPG offers courses that last between four to six weeks and give you all the information you need to pass the Certified Franchise Consultant exam. While there is no official license for franchise brokers, your certification with the IFPG’s network will give you access to hundreds of the industry’s most respected franchise brands.
There are many benefits of using a franchise broker for both franchisors and prospective candidates.
Benefits of a Franchise Broker (for Franchisors)
Make Recruiting More Efficient
When you’re a franchisor, there is a lot on your plate. Not only are you focused on the primary function of a franchise (whether it is a yoga studio or a restaurant), but you also have the training, support, and legal obligations to consider. Additionally, franchisors spend lots of time talking to people considering investing in their brands. That’s where franchise brokers come in. The broker does the leg work and uncovers critical items before the candidate reaches the franchise.
Find Quality Candidates
The primary purpose of a franchise broker is to act as an intermediary between buyers and sellers of franchises. The broker identifies qualified candidates who fit a brand’s mission and values. A good franchise broker asks franchisors questions to get a feel for the candidates they want to recruit.
Act as Partners
The franchise broker will work hand-in-hand with the franchisor and the prospective candidate during the discovery process. The candidate feels comfortable with brokers because they are a neutral third-party in this process.
Help the Buying and Investing Process Move Forward
A franchise broker can keep the franchisor on track with reminders. Additionally, there are multiple steps for the brokers to manage, including reviewing the Franchise Disclosure Document (FDD), contacting current franchisees in the system and securing funding.
Help Franchisors Save On Overhead
Franchisors only pay brokers when a franchise is sold, which can save the franchisor money on hiring a sales force that interviews countless candidates regardless of whether they work out or not. Additionally, data from the FranConnect Franchise Sales Index shows that leads from a franchise broker close higher than other leads.
Trusted Source for Conversions
Data shows that franchise brokers are a trusted source for conversions for franchise sales. When done correctly, referral marketing has been shown to increase 10 to 30 percent in franchise sales. Surveys, such as Nielsen’s Global Trust in Advertising, show that brokers are more trusted than other traditional marketing channels. This means that franchisors are turning to brokers to find serious entrepreneurs who want to open a franchise.
When working with franchisees, the broker wears a consultant hat, offering candidates advice.
Benefits of a Franchise Broker (for Prospective Buyers)
Offer Education
A good franchise consultant offers candidates a proper education about the regulations, costs, relationships, and opportunities that come along with a specific franchise.
Provide Thorough Assessments
The consultant will take the time to evaluate the prospect’s financial situation and their previous experience in as well as the skills they will bring to the franchise. The prospective franchisee can also expect a personality test to determine if franchising is right for them.
Assist You with Your Direction
Based on the consultant’s assessments, the broker will introduce the candidate to the available opportunities.
Knowledgeable about Important Documentation
Franchise consultants have deep knowledge about owning a franchise and the process of purchasing a franchise. Thus, these consultants can explain important documentation such as the Franchise Disclosure Document and franchise agreement. With this knowledge, the consultants can find quality entrepreneurs who want to open a franchise to invest in a franchise business.
Important Part of Due diligence
The due diligence process a candidate goes through is a three- to four-week undertaking that gives them a chance to get to know a franchise company’s executives and ask essential questions. The consultant will guide the candidate through this process.
Free Advice
Working with a franchise consultant isn’t just low cost- it requires no cost! This professional will guide you through the process of buying a business to make it as straightforward as possible. You will discuss your skills, background, and goals with the franchise consultant, who will find the best franchising opportunities for you.
Keep You Motivated
Working with a motivated franchise consultant can help you stay driven during the difficult process of finding the ideal franchise business. Franchise consultants know how owning a franchise will benefit your life, so they will be in constant contact with you to ensure you’re on the right track in the process of buying a business.
The consultant will also be patient with you since the buying and discovery process isn’t easy. Patience is one of the several characteristics that brokers should have when working with entrepreneurs who want to open a franchise.
Confirm Your Decision
The candidate will have a face-to-face meeting with the franchisor and the leadership team at some point. At the end of this process, the consultant will help to confirm if investing in this franchise is the right decision.