This Professional Wears Multiple Hats When Connecting Buyers and Sellers of Franchises
People are often confused about the difference between a franchise broker and a franchise consultant. By definition, a consultant is a professional who offers advice in a specific area. A broker, by definition, connects a buyer and a seller.
In the eyes of a potential franchisee, a consultant offers professional advice. To a franchisor, the broker helps connect the brand with a buyer. So a franchise broker and a franchise consultant is essentially one person wearing two hats and serving two parties. These terms are used interchangeably in the industry, but they are essentially one in the same. Other names for this role is franchise referral consultant and franchise coach.
The job of a franchise consultant is to offer expert advice to prospective franchisees to determine if they’re suitable for franchise ownership. These services are free to aspiring franchise owners. The consultant’s job is to educate the prospective franchisee about the industry and work with them to find great franchise opportunities based on their interests, budget and skills.
It is essential to be a good listener as a franchise consultant. It is also incumbent upon the franchise consultant to do their due diligence and research, network, and relationship-building to do their jobs fully. They should also take the initiative and meet with franchisors, as well as take opportunities offered by their franchise broker network. The consultant’s role is to set up the perfect matches between potential business partners, which, in this case, are the franchisors and franchisees.
One of the reasons for the rise in the need for franchise consultant services can be attributed to the COVID-19 pandemic. Over the course of the pandemic, millions of people quit their jobs and began looking for new careers. At the same time, industries, like franchising, have been growing rapidly. According to predictions from The International Franchise Association (IFA), franchising will open up over 800,00 new jobs and 26,000 locations by the end of 2021.
As franchising booms, so does the need for franchise consultants. The most successful consultants will be those most active in the industry who take the time to learn the ins and outs of the industry and keep up on franchise brands. The increased need for franchise consultant services is a good sign because it shows that people are taking control of their careers and are seeking guidance before taking their next steps.
When a franchise consultant puts on his broker’s hat, the job entails connecting franchisors with qualified franchisees. Franchise brokers work closely with franchisors to ensure a smooth process for the candidate. When a franchise is awarded, franchise brokers are paid commissions by the franchisor. Franchise brokers save franchisors time and money by presenting qualified and interested candidates who are serious about franchise ownership. Franchisors want to develop strong relationships with franchise brokers because this relationship can speed up the sales process and help the brand grow with quality franchisees.
According to FranConnect’s Franchise Sales Index, the top sources of deals in Q3 2020 were from two forms of referral sources: 1. Franchise Referral Consultants (aka brokers), and 2. organic referral (family, friends, associates, and customers). This significant finding illustrates the importance of these professionals to the growth of franchising.
Franchise Broker Network
Franchise broker networks are in the business of connecting franchisors and franchise consultants (aka franchise brokers). A good example is the International Franchise Professionals Group (IFPG), which has been ranked the No. 1 franchise broker network by Entrepreneur magazine for three years in a row. Franchise broker networks like IFPG connect franchisors with franchise consultants and host events to learn, share best practices and network in a fun and professional atmosphere.
According to IFA, franchising is expected to contribute $477 billion to the U.S. economy in 2021, and is expected to continue to grow. The need for franchise consultants and franchise brokers will only grow along with the industry. Their role will be pivotal for the continued success of both prospective franchisees and franchise brands.