Anyone pondering an investment into a franchise business would be smart to consider consultation with a franchise broker. It’s much like dealing with a real estate broker when you want to buy property, a franchise broker can assist you in locating the best franchise opportunities available within your budget and other standards and parameters.
The broker will act as a liaison between the buyer and the franchisor to complete the sale of a specific franchise. Many individuals prefer to deal with brokers due to their level of access to potential franchise opportunities and the relationships they have with the franchising companies.
How it Works
If you’ve decided you want to invest in a franchise business, you need to do a lengthy amount of research to help you ascertain what opportunities exist that meet your budget, your capabilities, and your personal goals.
Since this investment can put a substantial amount of your money at risk, you want to be sure you’re getting into a situation that will be ultimately rewarding and, of course, profitable. Your franchise broker is the solution to these challenges and while hiring a broker won’t eliminate the risk of your investment, it can help reduce those risks by buying into the best franchise business available.
In order to do this, your broker will sit down with you for what is basically an interview about what you want out of a franchise business, the time you will be able to devote to owning and operating the enterprise, the amount of money that you’re comfortable with investing, and other factors that will play an important role in determining which franchises fit your needs.
The Selection Process
The biggest benefit to using a broker is that once the initial interview process is complete, he or she will then be able to pinpoint the best matches for what you are seeking. This can be a big time saver as you won’t have to wade through thousands of listings; your broker will narrow the field down considerably. From there, you can make a more secure and educated decision about buying into that carpet cleaning business for sale.
Brokers are helpful in knowing when a certain franchise opportunity is too good to be true. You may think a low up-front investment of just a few thousand dollars is a great advantage, but in reality, the investment is so low because it’s not a very good brand or company.
Sometimes the market in a certain area is saturated and you wouldn’t have a chance at success, so the franchisor is just trying to get your money, knowing full well you won’t succeed as a franchisee. Your broker will be able to steer you away from these bad deals and you can hold on to your money.
Despite the fact that working with a franchise broker can help make your choice less speculative, you may still be taking a risk by choosing the wrong broker.
So do your homework on the broker you’re planning on working with before you come to any agreements. There is a relatively low standard for doing business as a franchise broker, they don’t need to be certified or pass any type of test or exam to become one. Anyone can call themselves a franchise broker. That means it’s up to you to weed out the bad from the good.
One way to do this is to explore their references, find out who they have worked with in the past, see how much experience they have dealing with the types of franchisors you wish to invest in, and ask around to get an overall sense of their reputation in the community.
The franchisors that they represent can also give you some idea of whether or not you’re dealing with a seasoned professional with a stellar track record or someone who’s out to make a quick buck for themselves. Without knowing the background of the broker you could be asking for more trouble than you had originally anticipated.
The bottom line is this, only long-term experience and strong relationships within the industry can show you the true benefits and capabilities of your potential broker.
How a Broker Makes Money
It’s important to know up front that you are not the party responsible for paying a franchise broker for his or her services. That falls to the franchisors who will either give the broker a flat fee or a commission on any sale of their franchise to an individual.
You should be aware of this fact because that could skew their opinion of one franchise over another in trying to get you to buy into a more expensive opportunity. This is not to suggest that all brokers are going to attempt to get a larger fee or commission by not taking your best interests to heart, but it does provide a warning to those of you who have never worked with a broker.