Franchise Consultant or Franchise Broker

Franchise Consultant or Franchise Broker? Know which one you’re working with.

Franchise Broker or Franchise Consultant?

There are literally hundreds, if not thousands, of franchise brokers that label themselves ‘franchise consultants’. Prospective entrepreneurs who are interested in buying a franchise should educate themselves on this subject.

There’s an enormous difference between the traditional franchise broker and franchise consultant. Somewhere in the 1990’s franchise representatives/brokers/salespeople began calling themselves consultants. The real reason for the change is quite obvious. The term ‘consultant’ sounds more attractive than broker. Unfortunately the change confused franchise new comers and franchise buyers, but that was arguably intentional.

How to Know The Difference Between Franchise Broker & Consultant: Just Follow the Money

Understand what is so different about the functions. The franchise broker (by any other name) represents various opportunity sellers, not the buyers, and is paid a fee (or commission) if a franchise buyer chooses one of the franchises with whom they have contracted for their services. So buyers must ask themselves a huge question: Who is the client when a buyer is working with a broker? The answer is quite simple. The client is the entity paying the broker’s fee – the franchise brand. No matter how brokers want to twist the definition of the relationship, if they’re paid a fee by the seller, the seller is the client.

A franchise consultant on the other hand is a ‘fee for service’ provider. A franchise consultant charges buyers a fee to advise and protect the buyer’s best interest. The most important aspect of this protection is serious franchise due diligence for breaking down and analyzing a franchise. You will not find a commissioned broker breaking down a franchise they represent and pointing out its flaws.

Buyers must choose which resource is best for their needs and interests. A good read on this subject is found here: Brokers called Consultants.

How to Identify Franchise Brokers

The easiest way to identify a franchise broker is by the following ad: ‘FREE FRANCHISE CONSULTING’. It’s the calling card for a franchise broker or salesperson. Nothing is free, but it’s a good incentive to make contact. As said above, just follow the money. How are they paid’?

Is There a Benefit to Franchise Brokerage?

Yes and no. The broker will introduce prospects to franchises they might otherwise not see. But there are at least two  downsides. One, there will be a barrage of introductions that can create more confusion than clarity. And two, the broker will only make introductions to franchises with whom they have fee arrangements. A franchise buyer should first have an idea of what they want to do and never limit their options until they’ve narrowed choices. Prospective buyers should take the initiative to study the steps in buying a franchise. Even more important is deciding whether or not self-employed is a viable career choice. A helpful process dealing with both of these issues is The Focus Program for Emerging Entrepreneurs.

What’s the Bottom Line?

Buying a franchise, when done right, is a complicated, tricky proposition. They’re expensive and making a mistake is costly. That means not only loosing a large amount of money when a mistake is made, but loosing time and finding misery if it’s a bad investment. Franchise failure rates are high, just like other businesses. A bad franchise purchase can ruin your life. So, buyers must ask themselves: Do I want free input and limited access from my broker or do I want protective services on my side? Simply put: FRANCHISE BUYER BEWARE.