There are several things today’s franchise brokers would like to keep under wraps.
The 3 things franchise brokers would prefer to keep under wraps that I’ve decided to share with you aren’t bad things. Not at all. They’re just things that you-the prospective franchise business owner should know.
Isn’t that why you’re here?
Don’t you want to have as much information on franchising as possible?
Franchise Broker Information I Shared So Far
In Part 1 of this 3-Part franchise blog series on franchise brokers-and some of the things they prefer to keep under wraps, you learned something really interesting about franchise brokers and the franchisors that use them.
Most franchise brokers work with the same franchisors, and most franchisors work with all of the same brokers.
So, what does that mean for you ? Why is it important for you to know?
It’s important for you to know so you won’t waste time working with two franchise brokers at the same time since they’re probably working with the same franchisors. It’s a waste of time, and can lead to serious confusion. It’s hard enough investigating two or three franchise opportunities at once, even if you’re doing it right.
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3 Things Franchise Brokers Would Prefer To Keep Under Wraps: #2
Who are you? Seriously.
When you work with a franchise broker, who are you?
Wait. Let me do it this way, instead.
Who aren’t you?
The answer: The client.
When you work with a franchise broker, you are not their client.
The franchisor is.
You only “feel” like you’re the client when you’re working with a franchise broker.
Just Follow The Money Trail
Most franchise brokers (who sometimes call themselves consultants) offer their services for free. That’s because they’re paid by the franchisors. It’s really easy to follow the money trail. Unless…
Some franchise brokers charge a fee. They call it a consulting fee or a commitment fee. It can range from $50 to a few hundred dollars. Some brokers feel that by charging a fee they’ll be able to get only “serious” prospects. It’s up for debate, but since I’m not a broker anymore, I’ll leave it to the brokerage community to do.
If you work with a franchise broker who charges a small upfront fee, does that change things? Are you the client since you’re paying a fee?
The franchisor is the client because they’re paying the big fee.
The franchisor is the client because they have a signed sales agreement with the broker. A signed contract.
Does it matter?
Yes. Of course it matters.
Whenever money changes hands because of something you’ve said yes to, a sale has been made. In this case, there are two sellers.
The franchisor and the franchise broker.
They both make money when you send in your check for the upfront franchise fee and sign the franchise contract.
It’s not a bad thing. But, it is a “thing.”
Should you become a franchise broker?
Full Franchise Broker Disclosure
I’m not sure you know this about me, but I’m trying to change the franchise world.
Part of the change that needs to take place has to do with disclosure. Franchise buyer’s need to know who’s who in the franchise broker-franchise buyer relationship.
Franchise brokers need to disclose their relationship with you-the prospective franchise owner.
Franchise brokers need to tell you who the client is-who their client is.
should needs to happen before you start working together.
It should be something that can be read and signed by both parties. The broker and you.
In today’s day and age-the age of transparency in business, it’s the right thing to do.
It’s important for you to know who’s who.
In Part-3 of this series on the 3 Things Franchise Brokers Would Prefer To Keep Under Wraps, I’ll unwrap something else for you.
I share lots of things about franchise brokers/consultants in my online franchise course.