Business services May, 19 2010

Franchise brokers mediating franchise success

With the success of franchising in India, the need for franchise brokers is increasingly felt. These franchise brokers are best known for their suitable match making between franchisors and franchisees. To know more about franchise brokers and their role

By Abha Garyali
Sub Editor
Franchise brokers mediating franchise success

Franchising that has emerged as a successful business concept is supported by the pillars of perfect match making between franchisor and franchisees. Here comes a franchise broker who carries out this match making exercise for the franchisors and the aspiring entrepreneurs. However, we often identify franchise brokers as franchise consultants. No doubt, both help to find perfect partners for franchising but these are entirely two different entities.

While franchise consultants are franchise experts who charge fixed amount of fee from the franchisors for getting hired whereas, franchise brokers are not franchise experts rather they are paid commission for finding perfect franchisees for franchisors and vice-versa.

Franchise consultants and brokers

Being a franchise broker does not require a long list of qualifications. Anyone who develops good network and relations with a large number of franchisors and franchise companies can start his franchise brokerage firm. Franchise consultants are specialist and experts from the field of franchising. They are paid a 'fee for their services' by the franchisors. Moreover, consultants advise the franchisors and franchisees, while brokers find out the right franchise and franchise partners for franchisors and franchisees. As informed by Rod Young, Executive Director, DC Strategy, “Typically, good franchise consultants are professional advisors to companies wishing to develop a franchise programme to grow their business and attract capital and personnel to become franchisee in their businesses. DC Strategy is such an organisation. On the other hand, franchise brokers (sometimes called franchise consultants in the US) are typically responsible for the selling of franchises as a contractor to the franchisor who may wish to outsource the franchise sales process.” However, both of them have one thing in common and that is providing suitable franchisees to franchisors and vice versa.

Emerging franchise brokers

Franchise brokerage is an international concept and is new to India. Though during the past few years it is emerging as a new career option and is picking up pace in India as well.

Franchise broker can be best described as the mediator between the franchisor seeking franchisees and entrepreneurs aspiring to take up franchise. Franchise brokers can aptly be compared to the real estate brokers and property dealers who search for a suitable property at the right price and are paid commissions for their services.

Role of franchise brokers

Let us discuss the various roles of a franchise broker:

Selection of the franchise: For debutant franchisees, selection of a franchise or franchisor involves lot of risk. They often make a wrong selection due to their budget restrains or popular concepts. However, a franchisee when seeks the advice of a broker can select the franchise of his interest and can further promote his chances of being successful.

Offers multiple options: Entrepreneurs may not be aware of all the concepts available in the franchising arena. A franchise broker is the best source to learn about the wider range of franchise options. Web based searches can help, but seeking the advice of a franchise broker to guide you through the whole process should be preferred.

Formal introductions with franchisors: Franchise brokers have access to hundreds of franchise companies that are aiming to expand their businesses with efficient and hard working franchisees. Rather than filling application forms and be screened from the list of hundreds aspiring franchisees, it is better to employ a franchise broker to take you to the franchisor as a pre-screened and qualified prospective franchisee.

Steers away from unsuitable franchisors: Franchise brokers can help aspiring franchisees to identify their skills, define their investment capabilities, and steer them away from franchisors that look good on paper, but have problems with their business model. Franchise brokers save them from investing their hard earned money on losing franchise business.

However, franchise brokers can also disguise the debutant franchisees by offering them an unsuitable franchise just to make money. Therefore, a franchisee has to be cautious in selecting the right franchise broker. Here are a few ways in which a client can judge whether his broker is concerned about his client’s success or just aims to make money:

Evaluating a franchise broker

Unbiased views about franchisors: Many franchise brokers may promote the franchisors which are in their portfolio. A franchise broker might speak negatively of franchises not in his portfolio. Therefore, rely only on a broker who always broadens his portfolio by aligning himself with other franchisors that may attract his clients.

Persuading for fast selection: Franchise brokers should take note of a client's skills and goals, and then present three to four franchise opportunities. They should never pester or force you to make a hurried selection from the limited options. A good franchise broker will have a long list of options as well as give you time to make your decision.

Endowed with rich knowledge of franchising: As an entrepreneur, you should be aware that anyone can become a broker as it does not require any degree, license, or formal training. Franchising arena is undoubtedly a vast field, but a broker should always know more than his client should. He should be able to answer all the queries related to the franchise and be a good source of information.

To end, seeking the advice of a franchise broker undoubtedly offers innumerable benefits, however a debutant franchisee must select a franchise broker cautiously in order to attain success.

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