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Caring Senior Service Franchise Blog

The Pros and Cons of Franchise Brokers

Posted by Michelle Cemental on Oct 26, 2016 9:00:00 AM

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Choosing a franchise to buy can be nerve-wracking, especially for brand new franchise owners. The spectrum of franchise opportunities available can be overwhelming, from a home care assistance franchise to a fast food brand. Even if you can narrow down to a specific industry, without expertise, it can be difficult to feel confident in your choices.

For many potential franchise owners, this glut of options leads them to hire a franchise broker. Franchise brokers, who can help potential owners find the best system fit, can be a good option in many cases, but like most business decisions, they have pros and cons.

Keep reading for help deciding whether a franchise broker makes sense for you.

What Is a Franchise Broker?

A franchise broker (who may also go by the title of franchise consultant, advisor, business coach, or other terms) is a person who helps potential franchise owners choose the right franchisor. They work alongside potential buyers to determine budgets, professional goals, and other constraints and then present the best franchise options for that individual.

Pros of Working with a Franchise Broker

Many franchise owners worked with franchise brokers when they were buying their first franchise, but not all find them to be necessary. Some of the reasons you may want to consider enlisting a franchise broker include the following.

A Franchise Broker Knows More Than You

A franchise disclosure document alone can be many pages long and difficult to parse unless you are an attorney. Combined with all the other information you can find on the franchises that interest you, that is a mountain of materials. Franchise brokers know what is important and can help guide you to the right information, which ultimately saves you a lot of time and a lot of headaches.

A Franchise Broker Costs Nothing

Reputable franchise brokers work on a commission basis, and that commission is paid by the franchisor when you decide upon one. You should have no out of pocket expenses when you hire a franchise broker, which is certainly an upside.

A Franchise Broker Can Speed Up the Process

Because franchise brokers should have a good deal of experience, they can help you narrow down your choices a lot more quickly than you might be able to do on your own. When you can choose between 3 or 4 potential concepts as opposed to every franchise under the sun, you can make better choices faster.

Cons of Working with a Franchise Broker

Of course, there are also downsides to working with a franchise broker. Some of these potential hazards include the following.

One Broker Does Not Represent All Franchises

Franchises do not directly employ franchise brokers, but brokers only work with certain franchisors. Because a broker does not have the ability to sell every single franchise, there may be some that are of interest to you that your broker does not sell. In this case, your franchise broker may try to steer you towards a franchise that is in their portfolio, even if it is not the best match.

Brokers Work on Commission

Although the commission-based system is good when it comes to upfront costs, it can be an issue if your broker is unscrupulous. The commission fee can be enough for some brokers to try to steer you towards a more expensive franchise to up their cut of the sale.

Whether you work with a franchise broker is a personal choice, but it is important to understand how the decision you make can impact your ultimate franchise purchase.

Are you cut out for franchising?

Topics: Franchise Ownership