By Gareth Parry
Choosing the right franchise can lead you to your dream of independent business ownership and financial freedom, while a poor choice can lead to headaches, heartbreak and, potentially, financial disaster. A good franchise consultant is there to make your job easier and to offer solid guidance and advice where you need it.
Traditionally, franchise consultants are experienced professionals who specialize in business planning, strategy, knowledge transfer, franchise opportunity reviews and similar services for prospective franchisees, on a paid basis. Franchise consultants also work with franchisors on a number of levels, particularly with regard to their growth and development strategies, turnarounds, marketing and general advisory services. Franchise consultants are also the primary drivers for existing independent companies that are seeking to begin expanding via franchising.
Lately, however, an increasing number of franchise salespeople and brokers have rebranded themselves as franchise consultants, perhaps to add a greater sense of credibility and professionalism. And typically, traditional franchise consultants also tend to offer brokering services, both as a result of franchisors’ requirements and for a more readily available income stream.
This is where things can start to get cloudy. Many franchise consultants or brokers are now contracted to one or several franchisors, who will pay them—often quite substantially—to source qualified candidates to become franchisees of their systems. These consultants then provide their services for free to the prospective franchisees and ultimately lead them toward their clients, with the promise of a nice commission cheque.
There is nothing wrong per se with this situation, unless these consultants do not truly match candidates with the best franchise opportunities that suit their personal circumstances, skill sets, financial capabilities and other important factors. This could lead to problems for both the franchisor and the franchisee on several levels down the line.
With that in mind, it is important for prospective franchisees to know what to look for in a franchise consultant, in the context of gaining help in finding the best possible franchise opportunity.
Getting the right help
There are a number of key steps a franchise consultant should discuss with prospective franchisees to help them along with their quest of franchise ownership:
Pros and cons of owning a franchise
Owning a franchise can offer many benefits, especially for inexperienced prospective franchisees, including brand recognition and perception, established systems, finely tuned business models, support and training, integrated operational systems, buying power and expert knowledge transfer. These advantages are extremely important if the prospect is comparing buying a franchise against starting his/her own business.
There are also downsides, however, for certain types of people and with certain types of franchises, including high upfront fees and build-out costs, ongoing royalties, stifling of entrepreneurial creativity, reliance on other franchisees and the franchisor, lack of flexibility, financial risk and false or misguided expectations.
The franchise consultant should paint a full and clear picture of the pros and cons of franchising for the candidate, both to help manage expectations and to provide food for further thought and reflection by the candidate.