When To Run From Your Franchise Broker
If you search the web for articles and advice on using
a franchise broker you will quickly find article after
article putting them down, claiming they lead you in the
wrong direction, they only show you their franchise, etc.
etc. As a franchise broker I find most of these articles
rather insulting, but as I often see or hear how many
franchise brokers operate I am forced to realize that
these opinions do not exist without merit. Like any industry
you can find your share of questionable people but I think
you will find that most of today's brokers are pretty
upstanding people who are trying to earn an honest living
just like everyone else. Nonetheless, here are a few things
to look out for when working with a franchise broker.
1. If Your Franchise Broker Speaks Poorly of
Franchises NOT in His Portfolio
Allow us to be biased as promoting our group of franchises
is our business, but any smart and realistic franchise
broker should be well aware that we represent a portion
of what is available today in franchising. A lazy franchise
broker may speak negatively of franchises not in his portfolio,
a successful one will use the opportunity to broaden his
knowledge of the industry and even try to align himself
with the other franchises he finds his clients are attracted
to. Either way - a good franchise broker knows and respects
that you are looking at other franchises, a bad one does
not. If yours does not then you may want to run.
2. If Your Broker Seems Shocked or Offended When
You Don't Jump At At least One of His 4 Suggestions
Some franchise brokers are taught to listen to a client's
skills and goals and then to present 3 - 4 franchise opportunities.
If you don't like any of the 4 suggestions then it must
mean they didn't hear you correctly or else you are not
correctly explaining your skills and goals. With today's
franchise research styles this seems silly. These days
people typically look at a lot more than 4 franchises
before making a decision and any good franchise broker
knows this. If your franchise broker seems shocked or
offended that you don't jump right on one of his 4 suggestions
you may want to run.
3. If Your Broker Promotes Franchise Brokering
As Your Best Opportunity
If franchises knew how many of the brokers say to their
their clients, "why own a franchise? There is a lot
more money to be made in being a franchise broker than
in being a franchise owner" they would probably choke.
Sure we run across candidates who may be a great fit for
this business, but despite the truth it's very easy to
make this business seem easy and very lucrative. Respectable
franchise brokers should not steal opportunities from
the franchises they represent to make a few easy bucks
selling the illusion of easy money as a franchise broker.
Some are more successful than others in this business
but being a franchise broker is anything but easy. If
your broker tells you right out of the gate the easy money
is in joining him as a broker you may want to run.
5. If Your Broker Pressures You Into Making Decisions
I once heard a franchise broker say that franchise candidates
are grapes - and within a few days they turn to raisins.
Basically - press them into making a decision fast or
else they will become raisins. I've done pretty well in
this business, but I have yet to see a deal happen as
quickly as this statement insinuates. In fact, most of
the deals I have been involved in take months to come
to fruition. Had I been impatient and pressured or given
up on my candidates for not making a decision right away
I would not have made a nickel in this business to this
day. Buying a franchise is a very big and very important
decision and any good franchise broker respects this.
While it is possible that someone can come along and buy
the territory you are interested in while you do your
due diligence, I see this line used far more often as
a tactic to pressure someone than it being fact. If your
franchise broker pressures you into making a quick decision
or eludes that you won't be taken seriously unless you
are ready to buy now you may want to run.
6. If You Know More About Franchising Than Your
Broker
Anyone can become a franchise broker. You can invest a
few thousand and join an organization or you can start
calling franchises asking if they will work with you as
a broker and abra kadabra - you are a franchise broker.
No licensing, no tests, no certifications. I have attended
conference calls where franchise brokers didn't even know
that "cash" and "liquid" were synonymous.
Frightening. The franchising industry is huge so you cannot
expect your broker to know everything, but he should be
a source of knowledge to you. If your franchise broker
stammers and stutters over simple questions about this
industry you should definately run.
There are good and not so good franchise brokers in this
world. At the same time, a good franchise broker can and
will offer you a wealth of information, inside tips, guidance
and understanding making your franchise exploration a
lot easier and less stressful. If you are working with
a franchise broker and feel he's selling snake oil, don't
be quick to judge the industry as a whole - but instead
consider finding yourself another broker.
Article by Marc Stephens
FranExpert
Franchise Consulting
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