Franchise Brokers Vs. Franchise Consultants – Distinctions With A Difference
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. Theres 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 youve 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 youre 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 15000 or 20000 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 its 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 kickback or consulting fee. Many franchise brokers call themselves franchise consultants to hide their true identity. So make sure if youre 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
About the writer:nbsp;nbsp;Known in the industry as Mr. Franchise MBA franchise attorney and internationallyknown franchise expert Kevin B. Murphy is also an author instructor and former franchise owner. He hold degrees in Business Administration B.S.B.A. and Law J.D. from the University of San Francisco and a Master’s degree in Business Administration M.B.A. from San Francisco State University.
For the past twentyeight years he has specialized exclusively in the franchise industry and owned a very successful franchise in the home improvement field. He has written over 30 publications including four books on franchising and one book on trade secrets.
Mr. Franchise instructs franchise company personnel in best franchise practices and teaches franchise licensing and intellectual property courses to attorneys. He has drafted reviewed and negotiated over 500 franchise offering circulars.
Mr. Franchise is a franchise attorney and Director of Operations for Franchise Foundations a San Franciscobased professional law corporation.
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