Franchise Brokers

Saturday, March 20, 2010

How to Choose a Good Franchise Broker

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If you are thinking of becoming a franchisee you are starting in a good path. It can be very exciting to start your own franchise but you will also have to comply with the franchisor and make hard decisions.

The franchise contract is an important factor in your franchising career. It will stipulate what you can and cannot do on certain things and what the franchisor is going to do for you or not do. That contract can sometimes be just a little tricky to read or completely bogus. You will want to make sure that you understand the contract completely before signing it.

There are many legitimate franchise opportunities out there but there are also a few franchising scams. You may want to find a good franchise broker to help you through your choice of becoming a franchisee.

A good franchise broker can help you determine if the franchise contract is legitimate. They can also ensure that what was verbally agreed to you from the franchisor is the in the written contract. You should never just take someone's word.

They can also help you negotiate the franchise contract if you feel that something is not in your favor or you disagree with. A good experienced franchise broker should be able to spot a bad contract for you, so you don't get roped into something you thought was something totally different.

It is essential that you choose a franchise that is something that fits for you personally and financially. Your broker should be able to help you by presenting many different franchises for you. You want a franchise broker who is able to show and explain as many as possible, not one who only offers you three and gets mad if you don't like them.

You need to find a broker who is supportive of you decision in franchising and who is willing to help you achieve your goals. If they are trying to deter you from franchising and get into a different business opportunity then you need to find a new one. A good broker will not conduct themselves that way. Usually it is a way for that broker to make money quick and sadly you won't be left with anything.

A good franchise broker will take into consideration that buying a franchise is a big decision. It is not a decision that you should be rushed or pushed into. If you want to take your time and weigh all the options, he or she should respect that. A good franchise broker will not put pressure on you to buy right away; they will allow you the time you need to make a good decision.

One of the biggest things to look for in a good franchise broker is if they know about franchising. You will want to find someone who is very knowledgeable in franchising. This franchise broker should be able to answer all the questions you have about franchising. If you know more than they do, what is the need for them in the first place? If they are not helping you, you should find a new franchise broker.

There are good ones and bad ones; you just have to find the good franchise brokers.

(ArticlesBase SC #541837)

Samantha McCartney - About the Author:

Labels: broker franchise, franchise brokers, good franchise

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Franchise Brokers Help Businesses Grow

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Franchise brokers can help grow a franchise business. There are many entrepreneurs who create great business models that can be franchises. The fact that there are so many franchise opportunities means that in order to sell franchises many businesses need franchise brokers.

Franchise brokers help bring buyers and sellers together. In the franchise world this means bringing together people who want to buy a franchise with people who are selling franchise opportunities. The best franchise brokers will screen the leads prior to selling them to maximize the opportunity for the lead to result in a conversion (a sale of a franchise).

There are franchises in many different industries ranging from pet franchises to fitness franchises, food franchises to auto franchises and everything in between. Typically franchise brokers will represent franchises is many different industries in order to match potential business owners with the right franchise.

Franchise brokers that qualify leads try to match the franchise buyers with the right franchise by going through a series of steps all geared towards determining the best match between a franchise buyer and the available franchises.

Not all franchise buyers are cut-out for the type of franchises they are considering that is why the best franchise brokers do some screening. For example, food franchises are very different than fitness franchises or pet franchises. Matching the skill set and personality of the franchise buyer with the opportunity is important.

Companies considering hiring franchise brokers should find out about their screening process and have a strong understanding of what the franchise broker does and does not do in terms of screening potential franchise buyers. This will help them know the value of the lead they are buying. For example, leads that have not been qualified will likely result in far few conversions than qualified leads that show strong promise for a particular type of franchise.

Whether or not you already have set up your franchise business you should consider starting it or growing it with franchise brokers.

(ArticlesBase SC #1499424)

Robert Melillo - About the Author:

Labels: business franchise, franchise brokers, franchise grow

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Franchise Brokers Vs. Franchise Consultants - Distinctions With a Difference

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The terms "franchise broker" and "franchise consultant" are seen frequently in the press, often implying they are one and the same. But what is a franchise broker and how are they different from a franchise consultant. Do they both offer objective, impartial advice? This article answers these critical questions.

A franchise broker is a paid franchise salesperson. Many franchise brokers claim they will help find a franchise company that is the perfect match for your background and abilities, and that their service is free. In the beginning it all sounds good.

There’s some personality testing and review of personal finances. At the end of the day, it turns out they only represent a handful of small franchise companies you’ve never heard of before. A detailed analysis often reveals these highly touted franchises produce mediocre or even below minimum wage financial performance.

Yet franchise brokers don't mention this, and individuals continue to rely on their recommendations, believing the broker represents them. Nothing could be further from the truth.

Franchise brokers receive a substantial commission up to 50% or more of the franchise fee you’re paying the franchise company. Franchise Broker Realities: (1) Their service is definitely not "free" despite these and other similar misrepresentations.

It's really common sense - how could anyone offer a "free" service and survive in business? The simple truth is if you buy one of the franchises they're hawking, your money goes to the franchise company, then into the broker's pocket.

If anyone ever calculated how much time they spend to collect their $15,000 or $20,000 commission, it's probably more than a brain surgeon earns. (2) Franchise brokers definitely do NOT have your best interests in mind. They will do or say whatever they have to in order to close a deal and earn their commission.

A franchise consultant is usually an independent advisor who offers advice to others (usually franchise companies or firms that want to franchise their business) for a fee. This makes their advice more impartial in theory as long as they are not compensated by third parties.

Because they are not legally required to disclose actual or potential conflicts of interest, it’s important ask questions. For example, if they are recommending the “best franchises,” are they paid anything by the companies on their list? This could be a commission, kick-back or “consulting fee.” Many franchise brokers call themselves “franchise consultants” to hide their true identity.

So, make sure if you’re dealing with a franchise consultant, he or she is not really just a franchise broker in disguise.

For more information, visit the Franchise Foundations website

(ArticlesBase SC #504188)

Kevin B. Murphy, Franchise Attorney, MBA - Mr. Franchise - About the Author:

Labels: franchise brokers, franchise consultants, franchise distinctions

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3 Ways Franchise Brokers Deliver Value to the franchising Community

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"They want how much money?" I asked Jason Killough, who served as my VP of franchise development at a major franchise company where I was the CEO.

"Fifteen thousand," he said.

"Fifteen thousand dollars to send us a lead to buy a franchise? Are they out of their minds?"

Look at all they do!

Calmly, Jason continued, "It's not just to send us a lead, John. First, they find the lead. We don't! Keep in mind, it costs us about $10,000 just to find a good lead. They find the lead, they educate the lead, they introduce the lead to our concept, they teach them about our business, they send us only leads that make sense for us, and they get them ready for us to close the deal."

"We're in the wrong business, my friend!" I said to him. "With as many people who call me about buying a franchise every year, I need to be in that business."

Good brokers deliver quality franchisees

Jason laughed. He knew I was teasing, but I thought $15,000 was a lot of money, and I still do. However, after agreeing to several contracts with brokers, and paying them up to $15,000 for their services, which resulted in quality franchise sales, I changed my opinion.

Used to be I'd tell my clients, "Don't use a broker to sell your franchises. You don't need to! You can do the lead generation and selling on your own. I'll show you the process."

That was then. This is now. And for several years it's been a different world for everyone.

Not all brokers are created equal

I'm still cautious about using brokers. Too many of them are not dependable. Too many of them are in it for the money and they do not add value, which is truly matching a franchise prospect with the right franchise opportunity.

However, like everything else that involves contractual relationships, when you bring together the right parties, you make beautiful music. Or perhaps in this case you make beautiful franchising.

Making beautiful franchising

David Omholt, founder and CEO of The Entrepreneur Authority (TEA), is making beautiful franchising with franchisers. He's doing it for dozens of companies represented by his network of brokers scattered across the USA. Years ago, before he launched TEA, David visited with me for some start-up advice. I thought he was crazy!

Who needs brokers? Do what? Launch a brokerage service? Why?

Franchisers don't want that. Franchisers don't need that. Good luck, pal.

Integrity sets TEA apart

As it turned out, Omholt didn't need my advice because he had a well thought out plan - his background as a consultant with Accenture prepared him for his launch. What helped him most of all, however, was his commitment to integrity.

This wasn't a quick-buck artist who was going to rope people into buying businesses they didn't want and weren't prepared to operate - this was a guy who understood the value of building relationships and serving the same customers over and over and over again.

I still thought he was crazy to launch a brokerage, but I trusted that he would do so with integrity. In fact, he's the only broker to have won the Chairman's Award at the American Association of Franchisees & Dealers, in recognition of the standards he has set for brokers.

So I asked David Omholt about why franchisers should use brokers. Here's what he told me:

Three good reasons to use brokers

Local scaling. "We're surgical by nature," he said. "We work locally so we meet prospects face-to-face. We're not just working Internet leads, or talking to faceless people. We know the local marketplace, we get to know who's looking for a franchise in that marketplace, and we get to know them personally.

We target a specific market so we can find good franchisees. We help a franchiser cluster their units in a region because we've got the region covered. We're the franchiser's best source for filling in their markets."

Better royalty producers.

"We can find the better franchise candidates and match them up with the franchise opportunity that makes sense for them, and as a result they become better producers for the franchiser," Dave continued. "We meet face to face with every candidate. We get to know them. We understand their likes and dislikes.

We know the kind of business they want to own and we also get a sense for the type of business that they will be good at developing. And we don't represent just one franchise, so we're not limited, and the prospects know that. An in-house sales guy has one franchise to sell and he's going to sell it to that prospect.

But that's not our situation. We have many different types of opportunities to sell and we can afford to match the prospect to the best opportunity. That's how we find the better fit. We can see the mistakes and cut them off at the pass, so once our candidates become franchisees, they tend to be the better royalty generators." . . . I can personally attest to that point.

TEA found some of the best producing franchisees for HomeVestors. Those candidates would not have bought a HomeVestors franchise without TEA leading them to the opportunity - knowing that at the time it was the best opportunity for that candidate.

Cost optimization.

"We're efficient for a franchiser because by outsourcing to us, a franchiser can reduce in-house development expenses," Dave explained. "A franchiser can bring down the cost of supporting an in-house development team by utilizing brokers who will find the best prospects for the franchise company.

Since we're paid on performance only, it's not a hard check to write when we deliver a candidate. Plus, that candidate has already been educated - we've answered all their general questions - so the in-house team can quickly zero in on a prospect's specific concerns and close the deal. We reduce the franchiser's expenses."

Numerous brokers to choose from

Franchisers who work with brokers generally work with more than one - they don't often restrict themselves to exclusive deals. The latest issue of the Franchise Opportunities Guide, published by the International Franchise Association, lists more than 25 companies that provide brokerage services to franchisers.

Franchisers will find that the commission structures are similar among brokers - they're all in that fifteen k-plus range - but their capabilities will vary. Since they're not all created equal, it's important to do your due diligence before you sign a contract with a broker.

Who knows what that broker is doing?

One of my concerns about brokers - and a concern that many franchisers voice - is controlling what they do and say. "How do I know what the guy is telling prospects about our business? . . . How do I know that she's not misleading candidates financially about our opportunity?"

Brokers do not close the deals

Those are valid concerns, and they need to be addressed with the brokers at the time of forming a relationship. Keep in mind, however, that brokers do not close franchise sales. For $15,000 you'd think they would - but it's better for the franchiser and the franchisee that they do not!

Franchiser closes the deal, or not

They lead the candidate to the franchiser's sales team, and it's the sales team's job to close the sale. As Jason Killough told me when we initially discussed using brokers, "They tee up the deals for us. They don't close them."

The franchiser has the opportunity to ask the candidate what they know about the franchise, what the broker told them about the business, and what they expect if they become a franchisee. "We have the chance to agree to a sale or to deny it. It's always our decision," Jason assured me.

No deal no broker fee no beautiful franchising

So if a candidate was misled, the franchiser doesn't close the deal, at least not without correcting the misinformation. Of course, if the deal doesn't get closed, the broker also doesn't get paid. And a broker who misinforms one candidate is likely to do it again, and that's a broker who will quickly wear out his or her opportunities to make beautiful franchising.

And at $15,000 a pop, no good broker wants to risk that opportunity!

John P. Hayes, Ph.D., author and speaker, has written the Franchise Pre-Investment Checklist to help you thoroughly research franchise opportunities. A 30-year franchise veteran who has owned franchises and was the CEO of a major franchise company, John is perfectly suited to help you with your franchise decisions. He offers a variety of free reports, teleconferences and seminars to franchisers as well as prospective franchisees and franchisers.

Article Source: http://EzineArticles.com/?expert=John_P._Hayes_Ph.D.

Labels: franchise brokers, franchise community, franchising community

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