Signs of a Useless Franchise Broker

If you search the web for articles and advice on using a franchise broker you will quickly find article after article putting them down, claiming they steer you in the wrong direction, they only show you their franchise, etc. etc. As a franchise broker I find most of these articles rather insulting, but as I often see or hear how many franchise brokers operate I am forced to realize that these opinions do not exist without merit. Like any industry you can find your share of questionable people but overall I think you will find that most of today's brokers are pretty upstanding people who are trying to earn an honest living just like everyone else. Nonetheless, here are a few things to look out for when working with a franchise broker.

1. If Your Franchise Broker Speaks Poorly of Franchises NOT in His Portfolio
Allow us to be biased as promoting our group of franchises is our business, but any smart and realistic franchise broker should be well aware that we represent a portion of what is available today in franchising. A lazy franchise broker may speak negatively of franchises not in his portfolio, a successful one will use the opportunity to broaden his knowledge of the industry and even try to align himself with the other franchises he finds his clients are attracted to. Either way - a good franchise broker knows and respects that you are looking at other franchises, a bad one does not. If yours does not then you may want to run.

2. If Your Broker Seems Shocked or Offended When You Don't Jump At At least One of His 4 Suggestions
Some franchise brokers are taught to listen to a client's skills and goals and then to present 3 - 4 franchise opportunities. If you don't like any of the 4 suggestions then it must mean they didn't hear you correctly or else you are not correctly explaining your skills and goals. With today's franchise research styles this seems silly. These days people typically look at a lot more than 4 franchises before making a decision and any good franchise broker knows this. If your franchise broker seems shocked or offended that you don't jump right on one of his 4 suggestions you may want to run.

3. If Your Broker Promotes Franchise Brokering As Your Best Opportunity
If franchises knew how many of the brokers say to their their clients, "why own a franchise? There is a lot more money to be made in being a franchise broker than in being a franchise owner" they would probably choke. Sure we run across candidates who may be a great fit for this business, but despite the truth it's very easy to make this business seem easy and very lucrative. Respectable franchise brokers should not steal opportunities from the franchises they represent to make a few easy bucks selling the illusion of easy money as a franchise broker. Some are more successful than others in this business but being a franchise broker is anything but easy. If your broker tells you right out of the gate the easy money is in joining him as a broker you may want to run.

5. If Your Broker Pressures You Into Making Decisions
I once heard a franchise broker say that franchise candidates are grapes - and within a few days they turn to raisins. Basically - press them into making a decision fast or else they will become raisins. I've done pretty well in this business, but I have yet to see a deal happen as quickly as this statement insinuates. In fact, most of the deals I have been involved in take months to come to fruition. Had I been impatient and pressured or given up on my candidates for not making a decision right away I would not have made a nickel in this business to this day. Buying a franchise is a very big and very important decision and any good franchise broker respects this. While it is possible that someone can come along and buy the territory you are interested in while you do your due diligence, I see this line used far more often as a tactic to pressure someone than it being fact. If your franchise broker pressures you into making a quick decision or eludes that you won't be taken seriously unless you are ready to buy now you may want to run.

6. If You Know More About Franchising Than Your Broker
Anyone can become a franchise broker. You can invest a few thousand and join an organization or you can start calling franchises asking if they will work with you as a broker and abra kadabra - you are a franchise broker. No licensing, no tests, no certifications. I have attended conference calls where franchise brokers didn't even know that "cash" and "liquid" were synonymous. Frightening. The franchising industry is huge so you cannot expect your broker to know everything, but he should be a source of knowledge to you. If your franchise broker stammers and stutters over simple questions about this industry you should definitely run.

There are good and not so good franchise brokers in this world. At the same time, a good franchise broker can and will offer you a wealth of information, inside tips, guidance and understanding making your franchise exploration a lot easier and less stressful. If you are working with a franchise broker and feel he's selling snake oil, don't be quick to judge the industry as a whole - but instead consider finding yourself another broker.

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