Joel Libava
If you’re working with a franchise broker to help you find a suitable franchise to own, you’re going to want to read this in it’s entirety. Why?
So you can make sure you’re looking out for #1.
Key Takeaways:
This post provides candid insider perspective about franchise brokers from someone who previously worked as one. Key points include:
- Franchise brokers receive substantial commissions ($20,000-$30,000+) from franchisors when they place a candidate
- Despite appearing to work for you, brokers are actually contracted by and represent franchisors
- This commission structure creates potential conflicts of interest
- Some brokers may prioritize high-commission opportunities over finding the best match for you
- Not all brokers operate with the same ethics or priorities
- The author recommends thoroughly researching any broker before working with them
Finally, this franchise blog post emphasizes understanding this relationship dynamic to protect your interests when using a broker’s services to find a franchise opportunity.
I Used to Be a Franchise Broker
From 2001 to about 2009, I was a franchise broker.
The short version: I became a franchise broker after being let go from my management position at an automotive franchise business.
Basically, my dad convinced me that I’d be good at it, so I joined his franchise brokerage firm. As opposed to getting another “job.”
Between my father, the CEO of the national brokerage firm we were a part of, and some of the other brokers, I learned the craft, well. And I had a couple of good years as a broker, income-wise.
How Much Income?
Back then, franchise companies were paying franchise brokers around $12,000 for the placement of a candidate*.
*When you work with a franchise broker, franchise consultant, or franchise coach (which are all the same thing), you are considered the “candidate.” Now this is important.
When you work with a franchise broker, you are not their client. The franchise company (franchisor) is. Why?
Because franchise brokers have sales contracts with the franchisors.
That means they work for them, although it feels like they work for you. And they don’t charge you a penny! Now here comes the part you need to know.
Franchisors are now paying franchise brokers $20,000 to $30,000 to place a candidate (you) into their system. That’s a lot of money!
I Have Friends That Are Franchise Brokers
I have several friends who are franchise brokers.
These are people I’ve know for years. People who I like and trust. However…they are human.
And I don’t know about you, but if a company dangles $30,000 in front of me, I get pretty excited.
Note: even though I haven’t been a franchise broker for years, I still get emails from franchisors offering $30,000 commissions for sending them someone who becomes a franchisee. Obviously, I turn them down. Why Joel?
Because I’m not a franchise broker. I’m a franchise advisor. Anyway, here’s my point.
If you’re working with a franchise broker, you’re worth $30,000 to him or her.
So, logic dictates that a broker will aggressively try to match you to a franchise opportunity that will pay them a big commission like that. Right?
And the thing is they’re only human. And money is money.
Some Franchising Brokers Don’t Care
Some franchise brokers are greedy pigs. There…I said it.
They don’t care if the franchise they’re representing isn’t doing well, or isn’t even a good match to what you say you want in a business.
Instead, they only care about getting a $30,000 franchise commission check overnighted to them. It sucks, but as you can see here, it happens.
Bottom line?
All franchise brokers aren’t created equal.
So, if you’re going to work with one, do your homework.
That means using your favorite search engines and social media site (s) to see if there’s any dirt on the broker you’re considering working with. It’s not hard to do.
What if You’re Working with a Franchise Broker Who Found You a Franchise You Like a Lot!
If that’s the case, there’s something you can do to make sure you’re looking at a legit franchise opportunity that has real potential to make you some money and reach your dreams and goals.
And, to see if the franchising broker is looking out for her best interests or yours.
That something is a Personal, Risk-Lowering Franchise Evaluation.
Get an Unbiased, Personal 1-on-1 Franchise Evaluation
My Franchise Evaluations include:
A written overview of the franchise opportunity you’re considering, a private 40-minute call with me including unfiltered pros and cons, operational challenge identification, success probability assessment, plus my unbiased, “can you make money as a franchisee” opinion.
In addition, there will be ample time during our private call for you to ask me your most burning questions about what you’re potentially about to do.
Finally, my Franchise Evaluation Service serves as a crucial step in making an informed “yes” or “no” decision on your potential franchise purchase.
Learn more about my Franchise Evaluations
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