People often ask me about franchise brokers. On the surface, the idea of a franchise broker seems simple enough. Brokers put buyers and sellers together so whether a buyer or a seller, brokers would seem to be a very important component in the equation.
The fact is, brokers get paid to put buyers and sellers together. After all, they need to get paid too. Thus, by the pure nature of that relationship, they typically have a biased opinion. Odds are, they are representing a party that pays them upon procurement of a sale. So, let us look at this from both perspectives, the franchisor and prospective franchisee. For you franchisors or perspective franchisors - Brokers fill a void as a nice additional franchise sales outlet, but do not make the mistake in thinking that brokers are going to be your only source of sales for your franchise company.
We have found that companies that sell their own franchises have the greatest success in the long run. The reason for this is that a company selling their own franchises has to live with them for the term of the contract. This causes in house sales teams to have more stringent criteria placed on them. Thus, my advice is to first deploy an in-house sales initiative. In order to be successful with an in-house sales force, they will need to deploy a marketing program in order to generate leads for those sales people to follow up with. This strategy needs to address the following marketing opportunities:
1. Internet
2. Trade Shows
3. PR / Publicity
4. Print
5. Direct mail
Francorp believes that this multi-pronged approach is the best way to address franchise sales and marketing. As a secondary plan, brokers can add additional prospects to the equation. Though, be weary of deploying a marketing program and sending all of your leads to outside brokers.
I would not recommend that strategy. Your leads are then likely to be distributed among that brokers other franchisor clients in the event that they have a qualified franchisee prospect that is not interested in your particular business off hand. My advice would be to only use brokers that generate their own leads. In addition, be careful not to enter into an exclusive broker arrangement.
For those of you that are prospective franchisees, be weary of brokers steering you to a particular business in which they are obtaining a commission. Not all franchise companies pay commissions. What happens if you work with a broker and they do not show you a particular franchise that you are interested in learning more about? GO DIRECTLY TO THAT COMPANY. There are many brokers that are great people and and help people find their dream business. Though, brokers are not for everyone. I am not aware of any large national brokerage networks that are paid directly by the buyer. All of the brokers that I have met are paid by the actual franchise companies upon the sale of a franchise. In a perfect world, you perspective buyers should work with a broker for a fee that you pay so that your interests are being represented, not those of a hand full of franchisors.Now you sellers and prospective buyers are in a better informed position to be able to find the right opportunities that are out there for you all. You heard it here from Francorp, the franchising leader.
L. Patrick Callaway
President
Francorp, Inc.
http://www.francorp.com/
Franchise Consultants say How Much You Can Make
-
Looking at franchising your business? Francorp Inc., the leading franchise
consulting firm, looks to provide some insight into the question, "How to
Fra...
13 years ago
7 comments:
Francorp is built upon the principal of complete sustainability. Throughout francorps franchise development process francorp clients are educated and trained on how to run their franchise organizations effectively and efficiently. It is important that a new franchisor completely understand every element of what is invloved throughout this transition from sole proprietor to franchisor. Francorps clients are successful because of the simple fact that we tell business owners the truth up front about how franchising works and what is involved.
Francorp is a fantastic organization, and they are the only franchise consulting firm with a complete in house legal staff.
Francorp is a great consulting firm, they actually advised me not to franchise my operations, i take that as a sign of true consulting which is much appreciated from a small business owner.
Francorp is the industry leader.
Francorp works only with the best companies on the market. That is a big reason why francorp clients are so successful is because in an initial consultation a franchise analyst and franchise consultant will break down with you what the market is doing now, what they think of your business as a franchise offerring and whether Francorp is willing to take your business in the market.
I met with Francorp earlier this year at a workshop in Atlanta and was very pleased with the advice. I was told not to franchise my restaurant right now, but that in the future if I fixed A, B and C that I could be a viable candidate for a successful franchisor. I look forward to working with Francorp.
Francorp is an extremely well organized and managed group of highly skilled, experienced and talented people. I was very overwhelmed with the franchise development process and francorp walked me through the entire development.
Post a Comment