The majority of franchises are not represented by consultants/business brokers. Would you work with a realtor that could only show you half of the homes available in your target area? The same rule should apply to franchise brokers…
The job title of franchise consultant is just another name for business broker. No matter what they are called, the question remains: Should you use a franchise consultant or business broker to help you conduct franchise research? The truth is that while franchise consultants and business brokers can serve a purpose for basic research, there are issues to relying solely on their input and recommendations.
Many franchise consultants do not have first-hand knowledge of many franchises, why? Because let’s face it, there are approximately 4,000 franchises out there and there is now way that a single person could be well-versed in all of them. Therefore, the best way to really research a franchise is to speak with the franchisor directly since they will be able to provide you with a complete picture of everything you need to know about their franchise and their business.
In addition, a lot of people enter the franchise consultancy / broker market by buying into a franchise concept with a low buy-in that allows them to become a broker with little training and actual knowledge of the intricacies of the franchising market. That means that they can lack the experience necessary to help their clients make an informed decision.
Here are some key reasons to think twice about relying on a franchise consultant or business broker as your only source of franchise research:
- With hundreds of new yet unproven franchises flooding the market each year, it is very hard for a franchise consultant or broker to keep up. Think about it. When you are making a life-changing decision such as owning your own business, the last thing you want is to not have all of the information you need to feel comfortable in making that leap to entrepreneurship.
- How do franchise consultants make their money? If you do consult with someone, it is important to understand how franchise consultants make their money. Generally, franchise brokers make money by either receiving commissions for the number of franchises they sell for a particular franchise or by a predetermined fee for each individual franchise that they sell. Therefore, they will typically only steer their clients towards only those franchises they have agreements with, and if one franchise is offering more in commission than another, you might be persuaded to consider those options even if they aren’t necessarily the right fit for you. It’s also very possible that you would never hear about a particular franchise even if it is the right fit for you because the broker is not representing them.
- Franchise brokers represent only 46% of all franchises* meaning their clients are being left in the dark for more than half of all franchise opportunities. If you sign on with a franchise broker, you will only be able to access a fraction of the franchise opportunities that are available to you. One person cannot possibly give you the full picture of all 4,000-plus franchises that are available. This means that there might be the perfect franchise opportunity that fits your background and lifestyle, and yet you will never know about it. Why take those options off the table if you don’t have to? (*source: Franchise Update 2016 Annual Franchise Development Report)
It is fortunate that we live in an age where there are easy ways to conduct franchise research, explore the data, and make direct contact with the franchisors that are most appealing to you. You shouldn’t deny yourself the chance to personally review the various business models or franchise opportunities you like in exchange for the limited selection that brokers might recommend based on their agreements and commissions payouts.
Because franchise consultants are paid when a sale is made, you should keep in mind that there are franchising options out there for you beyond the franchise for sale opportunities they might suggest. When making such a life-changing decision, you should not feel obligated or pressured in any way to make a move or to be limited in any as far as the scope of your selection.
Franchise Consultants and Business Brokers Can Create an Unnecessary Barrier
Julie Arndt co-owns Minuteman Press franchise locations in Brandon and Plant City, FL, along with her husband Mike. Julie realizes the scam potential of broker use and that they can become unnecessary barriers to a genuine understanding of a business or franchise opportunity so needed to find a home for your entrepreneurial spirit. She and Mike are grateful that they researched what turned out to be a fantastic franchising opportunity directly by touring active locations and speaking in person with business owners where they live and breathe, asking questions without pressure or the interference of a hidden agenda.
Julie and Mike were able to approach their franchisor, Minuteman Press International, with no-holds-barred questions and the answers were as plentiful as they were satisfying to their concerns about legitimacy. Therefore, on the use of brokers to find a perfect fit for you to become a business owner, Julie warns, “Brokers create a barrier between you and the company and not getting information directly can cause confusion. You may not like the broker or their communication style and then as a consequence, miss out on knowing that you DO like the franchise.”
It would be unwise to rely solely on a broker to serve up pertinent information based on a profile he may have created about your own personal objectives for business ownership. This is a meaningful investment of your own time and money so do not shrink away from doing your own due diligence. Get out into the real world and interview current business owners.
If you are curious about owning a franchise and would like to conduct your own franchise research rather than rely on a franchise consultant, here are 4 easy questions to ask yourself to narrow down your search:
1. What are your true passions or interests?
2. Why do you want to own a franchise business? What are your goals?
3. What is the viability and credibility of the franchise?
4. What are the core values of the franchise and do they align with yours?
By asking yourself these questions, the best franchise opportunities for you will come to the forefront. Then, you should speak to those franchisors directly. They should have an easy and transparent process for learning about their business, and provide a franchise disclosure document while welcoming you to explore the entire scope of their system, with pride. They should encourage you to tour their many locations and spend time talking with their franchise owners directly as well, allowing you to make a personal evaluation and determine if their franchise is the right fit for you.
So What Should You Do? Build a Direct Long-Term Relationship with the Right Franchisor
Mike Arndt, co-owner of the Minuteman Press franchise centers in Brandon and Plant City, FL, welcomes prospective franchise owners with enthusiasm, answering any questions they might have about his business. You don’t want to make the mistake, for example, of picking a franchise just based on the types of products and services they provide. There is more to the equation. The only way to see the whole picture is to investigate franchisors and their operations directly. Mike reinforces the need to get your hands dirty and really get familiar with your choices on a personal level in order to uncover the best ultimate selection. Mike advises strongly, “Cut out the middle man! Why pay a broker? They don’t have ‘your’ best interests in mind. Build a long-term relationship with the correct franchisor vs. a short-term one with a broker.”
As Regional Vice President for the Pacific Northwest, Chris Jutt continues to encourage everyone wishing to examine business ownership through franchising to bring all their concerns and questions directly to him. As a representative of an industry-leading franchisor, he is more than happy to serve as an “open book”, sharing his knowledge and expertise to those who seek answers from the source, rather than through a third party. He also invites them to visit Minuteman Press locations within his region to meet personally with franchise owners and learn about the process of starting up and making their businesses grow, while asking frank questions about what it’s like to own a Minuteman Press franchise.
Examine Franchise Opportunities to Find the Best Match for You
Chris Jutt explains, “With so many franchise opportunities out there, it is imperative that you examine the options yourself in order to find the best possible match for your personality as well as the best value for your investment. Business brokers are limited in terms of the range of franchisors that they bring to the table and they are frequently under-educated when it comes to franchising, in particular, a strong choice for entrepreneurs all over the world. The enormous benefits to be gained from an experienced franchisor in your corner, providing training and continued support, cannot be emphasized enough. It’s important to understand that business brokers, generally, are not well-versed in the franchising business model to be able to weed out the weak from the strong among franchisors – and the difference is critical. When I meet with potential business owners, they are getting their information straight from the franchise system and I am able to welcome them to tour active Minuteman Press franchise locations to explore and ask questions. For a decision as important as buying a business, it is always advisable to go straight to the source.”
Take Command of Your Next Career Step
The decision to go into business is one that likely developed over much thought and consideration to take command of your professional career and steer it into a more lucrative direction. One of your objectives is to isolate a business or franchise opportunity that resonates with your personal preferences in terms of the kinds of products and services you will be providing as well as the consistency and quality of training and support that you should be entitled to for your money.
Remember that business brokers and franchise consultants typically provide a limited profile of business opportunities, have no long-term vested interest in your success, and will steer you towards business or franchise for sale opportunities where they are receiving commissions. As a result, they just might not give you the best assessment of all of your options.
The good news is that you do not need them because you have been led by your own entrepreneurial spirit to begin this journey and you can be guided by your own instinct and intellect as you explore the entire scope of your options by meeting and visiting directly with representatives of various franchisors and other officials, without pressure. Upon wise reflection, after healthy consultations with business owners and professional leaders within the industry of your choice, you will be celebrating your own grand opening in your own good time, as it should be.
Looking into owning your own business? Research Minuteman Press franchise opportunities at www.minutemanpressfranchise.com.