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Why Use a Franchise Broker?

For the right person the franchise broker and consulting business can be a rewarding opportunity both personally and financially. This site is designed to help shed light on what is involved in becoming a franchise broker and compares and contrasts the leading franchise consulting firms in the industry. In 2010, which was a slow year for the franchise industry, there were approximately 20,000 new franchise units sold in the US alone. About 1/4 of these deals were done through a franchise broker.

There are currently about 1,000 active franchise brokers in the US and Canada. Franchise seekers who utilize the services of a franchise broker has grown from 5% to nearly 35% in the last 10 years. More and more franchisors are utilizing the services of franchise brokers every year. The average commission for a single franchise placement, which is paid by the franchisor, is approximately $15,000.

A strong franchise consulting firm will represent a wide selection of franchise types but use enough discipline to represent only the premium brands within each category. There are a number of franchisors who will gladly work with franchise brokers but the truth is many do not have very solid nor proven business models and these are not always the best franchises to be exploring. One of the most compelling reasons to buy a franchise is the fact that it's a proven business system so beware the franchise broker groups that represent a long list of non-proven franchises that are desperate to grow.

Despite what it may seem at first glance, there are little if any correlations between a group that represents the most franchises and the number of deals that group and it's brokers do each year. When it comes to exploring franchises quality should always take priority over quantity.

The Role of a Franchise Broker

A franchise broker, also known as a franchise consultant or a franchise adviser or "coach" serves a couple of key roles. A franchise broker assist entrepreneurs in identifying and exploring the franchise opportunities that are most likely to meet the goals for their clients, while also assisting the franchises they represent in recruiting ideal prospective franchisees, thus helping them grow their franchise organization.

A franchise broker will help prospective franchisees identify their goals, strengths, weaknesses and more and suggest franchises that are a good fit for that prospective franchisee. Once franchises has been identified the broker will also assist in confirming which nearby markets and territories are available and help their clients receive the information they need to explore each opportunity. A good franchise broker can also assist their clients in obtaining financing for their new business and coach them through the entire discovery process.

A franchise broker will serve as an intermediary between franchisor and franchisee assisting both sides throughout the research process. This can include delivery of marketing materials, explaining the franchise disclosure document, helping with validation and in some cases even negotiating fees, growth schedules, territory rights and more.

In summary, a professional franchise broker will assist both franchisor and potential franchisee throughout the mutual discovery process making sure that both parties are truly a good fit for one another offering both sides a likely chance for success.

Contact The Professionals at YFT to locate your ideal franchise match!

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