| The terms "franchise broker" and "franchise | | | | "free" service and survive in business? The simple |
| consultant" are seen frequently in the press, often | | | | truth is if you buy one of the franchises they're |
| implying they are one and the same. But what is a | | | | hawking, your money goes to the franchise |
| franchise broker and how are they different from a | | | | company, then into the broker's pocket. If anyone |
| franchise consultant. Do they both offer objective, | | | | ever calculated how much time they spend to collect |
| impartial advice? This article answers these critical | | | | their $15,000 or $20,000 commission, it's probably |
| questions. | | | | more than a brain surgeon earns. (2) Franchise |
| A franchise broker is a paid franchise salesperson. | | | | brokers definitely do NOT have your best interests in |
| Many franchise brokers claim they will help find a | | | | mind. They will do or say whatever they have to in |
| franchise company that is the perfect match for | | | | order to close a deal and earn their commission. |
| your background and abilities, and that their service is | | | | A franchise consultant is usually an independent |
| free. In the beginning it all sounds good. There’s | | | | advisor who offers advice to others (usually franchise |
| some personality testing and review of personal | | | | companies or firms that want to franchise their |
| finances. At the end of the day, it turns out they | | | | business) for a fee. This makes their advice more |
| only represent a handful of small franchise companies | | | | impartial in theory as long as they are not |
| you’ve never heard of before. A detailed | | | | compensated by third parties. Because they are not |
| analysis often reveals these highly touted franchises | | | | legally required to disclose actual or potential conflicts |
| produce mediocre or even below minimum wage | | | | of interest, it’s important ask questions. For |
| financial performance. Yet franchise brokers don't | | | | example, if they are recommending the “best |
| mention this, and individuals continue to rely on their | | | | franchises,” are they paid anything by the |
| recommendations, believing the broker represents | | | | companies on their list? This could be a commission, |
| them. Nothing could be further from the truth. | | | | kick-back or “consulting fee.” Many franchise |
| Franchise brokers receive a substantial commission up | | | | brokers call themselves “franchise |
| to 50% or more of the franchise fee you’re | | | | consultants” to hide their true identity. So, make |
| paying the franchise company. Franchise Broker | | | | sure if you’re dealing with a franchise consultant, |
| Realities: (1) Their service is definitely not "free" | | | | he or she is not really just a franchise broker in |
| despite these and other similar misrepresentations. | | | | disguise. |
| It's really common sense - how could anyone offer a | | | | |