HOW TO FRANCHISE?

One common trap potential franchisees fall into is relying exclusively on the help of a franchise broker to decide what type of franchise-based business opportunity to pursue. A franchise broker is a third-party consultant who matches up franchisees with franchisors based on common goals. Some franchise brokers are truly independent and have the interests of potential franchisees in mind as they offer their services. Other brokers, however, represent only a handful of franchisors and get paid based on creating matches with franchisees that may or may not be suitable. As a result, the brokers’ focus is on matching up the best potential franchisees with specific franchisors, based on the specific qualifications a franchisor is looking for. Thus, the information and guidance you receive might be biased.

On paper, using a franchise broker might appear to make sense. After all, they’ll supposedly help you narrow down your many options and assist you in choosing what the broker believes is the perfect opportunity for you, based on an in-depth personality profile, financial evaluation, review of your business experience, and a look at your goals. Before working with a broker and relying on his or her advice, however, determine for whom they’re actually working. Does he or she represent you or the franchisor? Also determine exactly how the broker is compensated and what criteria are used to help the broker make recommendations.

As one of the final steps before paying all that money when you sign on with a specific franchisor to become a franchisee, ask whether you can spend a full week working as an employee or observer at an existing franchise location. This will help you to start learning the business, plus it’ll help you determine whether you’re cut out to run this specific type of business and work within the environment that the business creates.

Instead of relying exclusively on a franchise broker, seriously consider doing your own research, making contact with potential franchisors yourself, and then hiring your own attorney and/or business advisor to provide the guidance you need. For
help finding the experts you need, every September, Franchise Times (an industry trade publication) publishes an annual Professional Services Directory.