Between these two, which one is better? Broker vs. Franchise Consultant
Many entrepreneurs that are looking to buy a franchise often ask, what’s a franchise consultant? What’s the difference with a franchise broker? Which should I work with? So in today’s video, I’m gonna address the three types of categories that basically encompass franchise consultants as well as franchise brokers.
1. 400+ brands
So the first one is a franchise broker. This is an individual or a firm that might represent anywhere from 2 or 1 to 400-plus franchises. Generally, the franchisor compensates a franchise broker as a percentage of the franchise fee. We’ve seen compensating fees being to franchise brokers that range anywhere from 20% to 70% plus.
They generally only receive compensation if a candidate that they present moves forward and invests in a franchise with that franchisor who’s paying the commission. Many of the franchise brokers receive little training and are generally more…many franchise brokers have very strong acumen, but at times, they do not receive great training in terms of really understanding the different franchise opportunities, as well as different industries. A franchise broker might be well specialized in one or two industries based on his or her prior career experience.
But at the end of the day, they largely operate as a one-man show where they’re part of a larger network where they have contractual… a franchise broker might be part of a larger network, where that network has negotiated referral contracts with 100, 200, 300, 400 franchises. So the franchise broker essentially is only compensated if a candidate he presents invest in one of those franchises.