If you’re looking into Franchising, surely you’ve tripped over the countless Franchise Broker Companies that are in business to match you with a Franchise.  They go by many names, like FranChoice, FranNet, Franchise Authority, Entrepreneur Source, the Business Alliance, etc — but they all act in the same general manner…..they help you pick a Franchise.  And for doing that, the Franchise Companies will pay hefty commissions to the Franchise Brokers.  But here’s the critical question:  Will a Franchise Broker match you up with a Franchise in a way that primarily benefits YOU, or in a way that primarily benefits the Franchise Broker?  The only way you can know that is to fully understand how the process works, and I can help you do that.  Just read on about “Franchise Brokers – the Good, the Bad & the Ugly”

The Good

There are literally thousands of Franchise Concepts out there, and all of them claim to be the absolute best Franchise opportunity under the sun.  How can you know which Franchises are “money”, and which are total losers?  Knowing this can make the difference between living a prosperous life and toughing out a financial disaster.  And that’s where a quality Franchise Broker can help you.  They are students of Franchising, and may even come from a Franchise Company.  A solid Franchise Broker is constantly researching the Franchise Industry, attends Franchise seminars & trade shows and is always speaking with Franchise professionals.  As a result, they know A LOT about Franchising, which Franchises are successful and which new Franchises have the best Franchise chance for success.  But even more basic, they can help you understand what Franchising is, what it requires and whether this business formula is for YOU.  And a Franchise Broker can also help you understand the various Franchise Categories (i.e. food Franchises, auto repair, painting, hotel, etc.) and what skills, personal traits and lifestyles each requires.  This can help you avoid the huge mistake of choosing a category that you’re not suited for.  All of this is incredibly valuable information that most first-time Franchise Seekers could never amass through traditional sources.  So, that’s the “Good”, and if you’re lucky enough to find the right Franchise Broker, it can be very good. 

The Bad

So what’s the “Bad”?  How about working with a Franchise Broker who is more into selling (and making money for themselves) than helping you make a good choice?  Or even worse, how about a Franchise Broker who knows very little about Franchising at all?  Many Franchise Brokers have never been involved with Franchising in any way whatsoever. The only reason they are able to “pose” as a Franchise Brokers is that their Broker Companies equip them with so much material, scripts and “process” that they are able to come off as an expert.  In fact, if this is your first time looking into Franchising, you probably wouldn’t be able to tell just how LITTLE these rookie Franchise Brokers know.  When that happens, the Franchise Broker isn’t focused on what’s best for you.  Instead, he/she merely parrots Franchise recommendations that are sent out from Headquarters, and these recommendations are often based on how much commission the “featured” Franchise is paying for a “Converted Lead” (that would be YOU).  Regardless, please assume that the Franchise Broker will NEVER recommend a Franchise (even if it’s perfect for you) unless that Franchise Company has agreed to pay the hefty commission that the Broker dictates.  All of this can be very bad. 

The Ugly

You want the “Ugly” about Franchise Brokers?  OK, here it is….and it IS ugly!  More times than any Franchise Broker Company will admit, their Brokers will recommend Franchises strictly based off HOW MUCH MONEY a Franchise is willing to pay that Broker.   Even more “Ugly” is this:  Franchises will routinely offer special financial bonuses or lucrative prizes in addition to the high commissions to provide extra incentive to recommend THEIR Franchise, REGARDLESS of what’s right for you.  That might be fine IF you knew this was going on.  But you surely won’t.  Amazingly, the Government doesn’t require that Franchise Brokers or the Franchise Company disclose how much “payola” changed hands to get you to bite.  In fact, just this year, the FTC changed the Disclosure Laws so Franchises no longer have to disclose which Brokers they work with or how much they have paid them in the past.  You may want to know these things to make sure that the Franchise Broker is NOT placing his/her short-term commission ahead of making the right recommendation.  After all, that recommendation just may determine your LONG-TERM success and happiness.  

So, now that you know the “Good, Bad & Ugly” of Franchise Brokers, you can set your sights on experiencing only the GOOD.  Find an experienced Broker that knows a lot about Franchising, and do not entertain any Franchise options until you are convinced that the Franchise Broker fully understands your lifestyle, interests, timeline, financial situation & ability and life goals.  Tell him/her that you want to see many Franchise options regardless of how much commission the Franchise Companies are paying.  In fact, ask her/him to disclose how much commission they will be paid.  He/she doesn’t have to do this, but an honorable Franchise Broker knows that to foster a positive & open relationship, they need to establish a straight-forward tone from the start.  A “Good” Franchise Broker will simplify and expedite the Franchise process, and help lead you in the best direction possible.  But if you believe you are in the presence of the other two types of Franchise Brokers (i.e. the “Bad” or the “Ugly”), there’s only one thing to do……Run!

Mark Kaplan is the Franchise Coach, and editor of BestFranchiseInformation.com. Mark is also the CEO of Great Wraps, Inc., a rapidly growing Franchisor of Hot Wrap & Grilled Sandwich Shops. Mark has spent over 20 years in Franchising, and he has a no-nonsense way of showing Entrepreneurs how to be successful in Franchising. Prior to Franchising, Mark championed major, national Brands for Corporate powerhouses like Coca-Cola, Nabisco Brands & Colgate Palmolive.