If you are looking to hire a franchise broker just because you have heard that this is what all franchisees do, then pause. You need to understand who you are hiring exactly and how that individual can help you with your franchise buying decisions. “Franchise Broker” is a broad term. These professionals can be franchise consultants, franchise advisors or franchise brokers and mind you, there is a difference between the terms. In this blog, we will focus on franchise brokers, in the real sense of the word “broker”.
Simply put, franchise brokers are individuals paid by franchisors to sell you their franchise and they are paid large commissions for the job. The good news is that their services are free for you. Now, as for the question whether you should or should not hire one, we will highlight both sides of the coin for you.
The Pros of Hiring a Franchise Broker
Let us consider the advantages you will get if you seek the services of a broker.
First of all, their services are free. Second, they help you avoid wasting money. That’s two money-saving deals in one. Their expert advice can prevent you from making the wrong choices and consequently keep you away from wasting your investment by buying disreputable franchises or falling into a scam trap.
With years of experience under the hat, franchise brokers can sniff out suitable franchises for you faster than you can ever manage yourself. With a staggering number of available franchises listed online, it is overwhelming for a new franchisee to weed out the wrong ones from the relevant ones. Also, brokers can streamline the buying process for you to keep you from falling into pitfalls that new franchisees typically fall prey to.
Franchise brokers are bound to a number of different franchises. So they can recommend you any one from their list based on your preferences, lifestyle and personality so that the franchise you end up buying is the right business model for you.
The Cons of Hiring a Franchise Broker
Nothing in this world is absolutely free. While the bright side of working with a franchise broker is definitely sunny, you should be aware of the downside to make educated decisions on your own.
While the pros certainly look lucrative, you must remember that the franchise broker is actually working for the franchise more than they are working for you. They will, of course, be paid large amounts by the franchisor if you end up buying one of their recommended franchises. So their advice is not always impartial as they are concerned about making their money too.
Brokers are paid when a sale is made. So, to bag large commissions, a franchise broker might pressurize you to buy a more expensive franchise that might not be in your best interest.
Though brokers are knowledgeable professionals, but not all brokers are the same. Some franchisors only provide limited information to the brokers and that could jeopardize your decision. Also, brokers have a limited amount of franchises in their reach out of the many thousands in the industry. So, you may not receive the best franchise options suitable for you as their tailor-made advice gets limited. You can inquire beforehand how many franchisors the broker is working with.
That said, you can now weigh the pros and cons before working with a broker as you embark on your journey.