Franchise Consulting or Franchise Brokerage

August 2, 2012 by  
Filed under Commercial Real Estate Tips

Franchise Consulting or Franchise Brokerage

Franchise consulting is a field similar to any other consultant that focuses on client relationship, whereby the franchise consultant would charge a fee to a client in exchange for a particular service. This is how the field of franchise brokerage was traditionally defined. If a franchisor needed a particular service, whether it was the formation of their franchise agreement, business planning, marketing and sales advice or any other type of third party consulting services, they would hire the consultant, draft a contract and scope of service, and pay consulting fees.

In the last few years, the definition has been changed as various franchise sales networks borrowed the term “franchise consulting” or “franchise consultant” to describe “franchise brokerage”. Instead of charging a fee, the franchise consultant offers their services for free and receives compensation only if their client happens to purchase a franchise.

It is my opinion that this new definition undermines the concept of franchise consulting as a service.

In addition to those that are marketing themselves as franchise consultants, when they are essentially franchise brokers, amounts to nothing more than a misrepresentation of what they offer.

It is a little disingenuous to describe yourself as one thing, when in fact you are doing something else. This is an issue that stirs a lot of debate in the franchise industry, and unfortunately, as franchise networks continue to expand, it could potentially marginalize it. I have seen this issue discussed on linked-in forums, trade shows and franchise radio programs.

Though I have not conducted any polls; still, I imagine to have done so, those in the industry, would prefer the traditional definition.

Please note that there is absolutely nothing wrong with franchise brokerage. Franchise systems are looking to expand their brands and many franchise concept leverage their relationships with various brokerage networks to bring them qualified candidates in exchange for a commission. It is no different than residential or commercial real estate brokerage, mortgage brokerage or leasing brokerage. A fee is paid for a service done.

The issue here is to accurately describe and define the role. If you are a broker being compensated by selling franchises, you can call yourself a franchise broker. And if you are in the field of franchise consulting and are providing additional services for a fee, you can call yourself a franchise consultant.

While I don’t foresee this debate getting resolved in the immediate future, as the franchise industry continues to mature, I think all of us should better call ourselves what we actually are. A close colleague and fellow franchise broker loves to use the phrase “fransparency”. Essentially, it is all about full disclosure. If we lay more focus on this franchise concept, the franchise industry would position itself for the better future.

The author of this article has specialization in Franchise Concepts. His enormous experience is summed up in the article ‘Franchise Disclosure Document brings the master plans for the Franchise Opportunities’. Along with this he also provides franchise consulting, franchise development and brokerage services to both individuals and franchise systems.

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