What Do Franchise Brokers Do?

Allbusiness:

Franchise brokers are employed by franchise companies to sell franchises. If you are looking at franchise opportunities, sooner or later you will encounter a franchise broker.

Using a broker won’t cost you anything. Brokers earn a commission only when you buy a franchise from one of their clients. When you sign your franchise agreement, the broker will typically earn 40 to 50% of the franchise fee you pay. In some situations, brokers may earn a percentage of your payments if you purchase additional franchises later, and they may even earn a percentage of the continuing royalty payments you make.

Using a broker to help you invest in a franchise is much different from using a broker when you buy a house. When you purchase a home, the homeowner pays a commission of approximately 6%, which is shared by the listing broker and the selling broker. The selling broker works for you, the home buyer, and can show you all the houses in the market where you want to live.

But franchise brokers only earn money on franchises offered by the clients they represent. So while there may be thousands of franchises available and hundreds that would be a good fit for you, the broker you are working with will probably show you only a very small percentage of available franchises.

While use of franchise brokers is increasing, only a small percentage of franchisors use broker networks, and even the largest broker networks only represent a relatively small number of franchise opportunities. Brokers can provide you with important information on franchising and the opportunities available - but only about the franchisors they represent.

More about franchise brokers here…