Should You Use a Franchise Broker?

A franchise broker is an intermediary between the person seeking to buy a franchise and the franchise company. In most cases, the franchise broker represents several different franchises and is not directly employed by the franchise they are representing. However, the franchise broker most often has an established business relationship with the franchisor. Ultimately, they assist their clients in choosing the best franchise opportunity. In addition, many franchise brokers, at one time or another, have been employed by the franchisor and understand the franchisor's requirements.

A pro of employing a franchise broker is that, often, it is a free service. Once a person purchases a franchise, the franchisor will pay the broker. Those seeking to purchase a franchise can seek franchise brokers where the all fees are paid by the franchisor. However, many independent franchise brokers will charge a fee so ask upfront what the fees are, if any.

A franchise broker will evaluate the interests, experience, and goals of the person wishing to purchase a franchise. By evaluating these objectives, they will be able to help aspiring franchise business owners figure out which franchise may be best for them. For example, if a person's experience and interests lies in food they would be well-suited to purchase a restaurant franchise and not a plumbing franchise. This pro of employing a franchise broker will prevent people from investing in franchises with little knowledge, which could lead to failure.

A con of employing a franchise broker is limitations. By going through them, the number of franchises available to choose from will be limited to their area of expertise. For example, some franchise brokers deal only with one kind of franchise. Though the majority of all franchise brokers do represent dozens of different franchises, they do not represent them all, leaving dozens more franchise opportunities off the table for consideration.