You want to buy a franchise so you can own something.
But the fear of choosing the wrong franchise…of losing all your money…is the cause of many sleepless nights.
So you think to yourself, maybe I should work with a franchise “consultant,” who can help me find a great franchise to own. And heck, it won’t cost me anything, since franchise consultants don’t charge for their “services.” But check this out.
If you are currently working with a franchise consultant, or are thinking of doing so, you need to read this post ASAP.
Because in it, I reveal 7 ugly truths about franchise consultants that they really don’t want you to know.
And these truths are so ugly, you may decide that getting “free franchise help” from a franchise consultant isn’t the best way for you to find the right franchise-so you can stop helping your boss reach her goals-and start reaching your goals and dreams. On your terms.
Let’s do this.
Franchise Consultant Definition
Before I dive-in, and share all the things I know about franchise consultants, you need to know what a franchise consultant does.
A franchise consultant-also known as a franchise broker or a franchise coach, works with people who are interested in investigating (and possibly buying) a franchise. And they don’t charge for their services. They’re the ones who offer “free franchise consulting.”
FYI: It’s important for you to know that there’s another type of franchise consultant.
The type of franchise consultant I’m referring to is a person who helps entrepreneurs turn their businesses or business ideas into franchise opportunities.
This post is not about them.
It’s about the people who offer to work with you for free…to “help” you find the right franchise.
“Free Franchise Consultations” are not consultations. They’re sales calls.
Simply put, every “Free Consultation” is designed to move you towards a franchise the “consultant” or “coach” represents, so the consultant can get paid his or her $20,000 commission from the franchisor.
7 Ugly Truths About Franchise Consultants
Here are 7 ugly truths you need to know, so you can protect yourself if you end up working with a franchise consultant.
But I do need to point out that these truths…these facts, are not generally shared with the public.
You’re about to find out why.
1. When you work with a franchise consultant (or a franchise coach or a franchise broker) you are not their client. The franchisors they have contracts with are.
But here’s the thing; franchise consultants don’t tell you that. Because if they did, upfront like they should be doing, you may not want to work with them.
“Joel, I don’t care who’s paying them as long as they can help me find a good franchise to buy.”
But you need to care. Read this article on franchise consultants so you can get a better understanding of exactly how they work.
One more thing:
There’s no question that if you work with a franchise consultant, you’re going to feel like you’re their client.
That’s because you’ll be talking to them via phone or email, a lot.*
But you are not their client.
Again: You are not a franchise consultant’s client.
* If you work with a franchise consultant, the reason you’ll hear from him a lot is because his goal is to keep you on track. To keep you interested in the franchise opportunities he presented to you. To get you to the point where you narrow your choices down to one.
So he can make a sale.
2. The reason a franchise consultant offers “free franchise consultations” has nothing to do with their desire to “help you become your own boss so can can take control of your future.”
Their “consultations” are free because franchisors pay them so damn much.
For example, if the consultant you’re working with presents a franchise opportunity to you that they have a contract with-and you end up buying it, the consultant, on average, will receive a check for $20,000 from the franchise company.
Meditate on that for a moment.
Why do you think today’s franchise consultants, brokers, and coaches keep their paydays secret?
It’s Question Time
What if a franchise consultant started off her free consultation like this…
Franchise Consultant: “Hi, this is Maria Pless-the franchise consultant you exchanged emails with. How are you?”
You: “I’m good. I’m excited to work with you so I can find a franchise to buy.”
Franchise Consultant: “That’s great! Now, before we begin, I want to tell you that if I match you up to one of the franchisors I work with, they’re going to pay me around $20,000. Are you good with that?”
You: Um..um…that’s an awful lot of money. I guess that’s why you’re willing to work with me for free, right?
Important: Sometimes, like when I’m quoted in The Washington Post, or other media outlets, I’m referred to as a franchise consultant.
Please note that what I do is 100% different than what the franchise consultants who are the focus of this post do.
Click here to see how I’m different.
More Ugly Truths About Franchise Consultants
3. When a franchise consultant contacts you…usually out of the blue, or you contact her, part of the spiel she uses to get you to take her up on her “free franchise consulting services,” almost always includes this:
“Tom, I work with 200 pre-screened franchise opportunities, and I because of that…”
Tip: If the franchise consultant you’re thinking of working with says that, ask her what a pre-screened franchise opportunity is.
Wait…I can save you some time here. Here’s what she’ll say:
“A pre-screened franchise is a franchise that our organization feels has met certain criteria. Plus, we call the franchisees ourselves to see if they’re happy with the franchise system and the folks at headquarters. And believe me, we are very selective about who we let in to our inventory of franchises.”
Sounds great, right?
In particular, offering franchise opportunities that have been pre-screened by people who know franchising sounds like a great thing. As a matter of fact, I’d bet that you’d want to learn a lot more about the consultant’s “stable” of pre-screened franchise opportunities. Heck…I would.
Except that I know exactly what pre-screened means in franchising:
Pretty much nothing.
Especially if you buy a franchise they’ve pre-screened and you end up going belly-up-and lose all of your money 9 months after you open your new franchise business. Talk about ugly…
But wait. You don’t have to believe me.
This Is What The FTC Says
Read this paragraph from The Federal Trade Commission (FTC) website:
“Some franchise brokers may claim they will suggest only those franchises that meet certain standards. You may think this means that your risk is limited because the broker weeds out poor investments. In fact, some brokers represent any franchisor willing to pay them a commission for a sale. A broker who does that might direct you to a franchisor that is failing or doesn’t have a strong history. Ask how the broker selects franchisors to represent. Ask to see the selection criteria and how many franchisors the broker has recently turned down.”
FYI: A few year ago, the FTC produced “A Consumer’s Guide To Buying A Franchise.” In it, there’s an entire section on franchise brokers (remember that franchise consultants and franchise coaches are brokers), including tips on what you need to watch out for if you work with one. Check it out.
A Gentle Suggestion
Good news! I’ve come up with a way for you to take advantage of those awesome “pre-screened” franchises. Check this out.
When a franchise consultant goes on about his “pre-screened” franchise opportunities etc., tell him that you’d like him to back those wonderful franchise opportunities he’s peddling. With a money-back guarantee!
In other words, if you invest the $185,000 needed to open the franchise business he presented to you…the one he-or his comrades “pre-screened,” and you go out of business a year and a half later, he’ll cut you a check for $185,000.
If he says, “No…I can’t offer a guarantee! All businesses carry some type of risk” or any other B.S. he vomits out, you now know the ugly truth about “pre-screened” franchises, and the consultants who offer them.
The bottom line: “pre-screened” franchises are no better than franchises that are not “pre-screened.”
As a matter of fact, one of the main reasons I left the franchise consulting franchise I was in was this:
Some of the people who had purchased “pre-screened” franchise opportunities I had presented to them (they were pre-screened by some of my fellow franchisees), were going out of business. Quickly. And I was starting to feel guilty. And bad.
Eventually, after trying to be an independent consultant for a bit, I changed my business model-and I became a franchise advisor.
In my* case, it means that I don’t get paid a brokerage commission from franchisors. Instead, I advise people on the smart way to choose, research, and buy a franchise.
So, for instance, if one day you decided to invest in any of my Guaranteed Franchise Ownership Consultation Packages (so you can make a smart, fact-based decision on a franchise to own), you’d get unbiased, straightforward advice personally tailored to you. There’s no selling involved. No B.S. because YOU ARE MY CLIENT.
If you’d like more specifics on how I work, go here.
*I recently found out that the term “advisor” is starting to be used by franchise consultants. I think you know why. And I think you know how to find out who it is they’re working for.
Franchise Consultant Backgrounds (WOW!)
4. This ugly truth is a doozy.
You may not know this, and it is rather strange when you think about it, but the majority of today’s franchise consultants don’t come from the franchise industry.
Let that sink in for a quick minute. WHAT?
To put it another way, these “consultants” have never worked in a franchise business, managed a franchise business, or owned a franchise business.
How crazy is that?
That means there’s a good chance the franchise consultant you end up working with has about as much real-world franchise experience as….wait for it…YOU!
Because of this, the obvious question you need to ask yourself is this: What does someone with no franchise business experience bring to the table?
5. He bought the business.
That’s correct. The franchise consultant you may end up working with is usually someone who purchased their “consulting“* business.
In other words, he ponied up $25,000-up to $75,000 to become a franchise “consultant.”
*Most franchise consultant “opportunities” are advertised. Look
He, like you, may have been a corporate refugee who was attracted to the $20,000 commission checks paid to consultants by franchisors.
6. The franchise consultant you’re thinking of working with has received formal training.
For exactly one week.
Or, in some cases, 3 whole days.
Now, that’s impressive.
Said no one ever.
Then they’re released into the wild.
FYI: There are actually a couple of franchise consulting organizations that do more extensive training. That’s a good thing.
But in reality, 90% of the people who enter the franchise consulting field are newbies. They know nothing about franchising. It takes years to get a good understanding of the franchise business. Heck, it takes years to get a good feel of any business that’s new to the person entering it.
Even so, they still insist on calling themselves “experts.” Especially when they’re trying to get you to work with them.
Tip: If a person offers to “help you find the right franchise” at no cost to you, have them list the reasons why they are qualified to assist you in your search for the right franchise.
This Happens a Lot
7. If you work with a franchise consultant, she only cares about the franchise opportunities you’re investigating that she offered to you. If I may be blunt here…
Warning! Do not tell your consultant that you’re looking at a franchise you found on your own.
Because if you do, she’ll turn that franchise into a freaking horror show.
In this case, the franchise opportunity you found-without her help, will all of a sudden be a “lousy” franchise opportunity. A real loser. A terrible franchise. You know why, right?
Because she won’t get paid on it.
I mean why else would she work with you for “free.”
In her mind, she has spent time with you. She’s offered franchise business “suggestions.” Shouldn’t she get paid for her efforts?
Tip: If you decide to work with a franchise consultant, broker, or coach, make sure you look at the competitors of the franchises they offered you.
But don’t tell your consultant! It’s none of his damn business.
After all, this is your money we’re talking about. Your life. Your future.
Bonus! More Ugly Truths About Franchise Consultants
Before I share more ugly truths, it’s important for you to know that I’m not telling you to not work with a franchise consultant.
Instead, I’m pointing out things…truths…about franchise consultants that no one else will tell you.
My feeling is this: you’re an adult. That instantly makes you qualified to make decisions on your own. You just have to make sure you have all the information you need to make a good decision.
One more thing: In the past year, more and more of the people who are becoming my clients are already working with a franchise consultant. Or they’ve dropped them.
Their reasons for doing so revolves around the same general theme. A lack of trust.
They’re not sure if they should trust any of the “advice” given by someone who stands to receive a $20,000 check from the franchise concepts they’re recommending.
Bonus Ugly Truth #1
When a franchise consultant hops on the phone with you during the calls you’re making to franchise company representatives, he’s not doing so to “help” you get the information you need to make a wise choice in a franchise.”
Instead, the consultant is hopping on those calls to make sure you stay on track…and to answer any objections you may have as you learn about the franchise opportunities he suggested you look into.
It’s kind of like when you use a Realtor to buy a house, and the Realtor shows up during the independent home inspection you paid $500 to have done. Why the heck is the Realtor there?
To keep the deal together.
So she can get her commission check.
Bonus Ugly Truth #2
Today’s franchise consultants don’t offer to help you find franchise financing out of the goodness of their hearts. They do it to make sure you get a loan so they can get paid. But, sometimes there’s another reason.
Some lending institutions, or even the firms that try to match people who need loans with lenders, are more than happy to pay a commission to a franchise consultant who refers someone to them.
But, in almost every case, the franchise consultant doesn’t disclose that to you. Don’t you think they should?
Should You Use A Franchise Consultant?
I have a few friends (as of this writing) who are franchise consultants.
Now, they’re not bad people. As a matter of fact, they’re good people. Honest. Ethical.
That said, some franchise consultants are definitely bad people.
Furthermore, some of them are liars, who will do and say anything to make a buck.
Food For Thought
- Should franchise consultants have to disclose more?
- Should they have you sign a document stating that you totally understand your relationship with them? Specifically that you understand that you are not their client?
- Should pre-screened franchise opportunities include some type of “guarantee?”
- Should banking relationships be disclosed, up-front?
- Should anyone who represents a franchisor as a broker, be required to call themselves a franchise broker-because that’s what they are?
- Should someone who calls themselves a franchise “expert” have to prove it? On paper?
Finally, and this is important, I completely understand that our brains are conditioned to react positively to the word “free.”
- Free Bonus!
- Free Appraisal!
- Free Franchise Compatibility Quiz
- Free Franchise Consultation!
The question I have for you is this:
In this case, is “free” the best way for you get the crucial, unbiased information you need to make a yes or no decision on becoming the owner of a business?
(Business training image courtesy of Wikimedia)
(“Hippie” image courtesy of Wikimedia)
How to Use a Franchise Opportunity Website
The 10 Commandments of Franchise Research
What You Need To Know About Franchise Consultants/Brokers