If you are contemplating buying a franchise in Canada, the expert advice and assistance of a qualified business advisor can be one of your greatest assets. But just as in any industry there are certain individuals in the field who can give business brokers a bad name. Therefore, knowing how to sort out the good from the bad is an important skill to have.
So how do you know which brokers to avoid? Start by running far away from any business advisors who practice any of the following bad habits.
What they say doesn’t seem to match up with reality
Many business brokers attract clients by promoting their track record. And why not, doesn’t everyone use a resume of some kind or another to get a job or land a client? But what happens when that track record just seems wrong somehow?
Is the advisor claiming they sell million-dollar businesses but only have smaller types of Canadian franchises in their portfolio? Do they say they know your local market but advise clients all over the country?
Any business broker worth their salt will be able to back up their claims with evidence. They should have a list of some of their recent transactions along with referrals from both buyers and sellers. An unwillingness to provide such evidence should be regarded as a red flag.
They spread themselves too thin
There is nothing wrong with putting in a lot of hard work. In fact, this is a quality that you want to see in a business advisor. But if the consultant isn’t able to devote the time and energy that you deserve, you could struggle to find the right business opportunity for you.
Also take note of the broker’s portfolio of franchisors. They should have partnerships with elite franchisors that have been extensively vetted and have proven track records of success.
They tell you that you don’t need your own lawyer or accountant
Experienced brokers get to know a lot about the ins and outs of buying and selling franchises in Canada and get to be pretty good at understanding things like tax implications, paperwork, etc. Even so, they should never encourage you not to do your own due diligence.
It is highly recommended to use any and all experts that you deem appropriate during your due diligence process. You may want to hire a qualified accountant, for instance, to help you assess the financials of the opportunity you are considering. Your franchise consultant should be able to provide you with valuable resources and contacts to help you get started.
They use high-pressure sales tactics
Most franchise consultant services are at no cost to clients. The franchisors they work with pay the fee when a successful match is made and the individual invests in the franchise, similar to an executive recruiter. High-pressure sales tactics, therefore, should be a red flag.
The consultation process is about finding the best fit for you. You may even discover that business ownership is not the right option for you, and an educated “no” is better than an uneducated “yes” when it comes to investing in a franchise.
If someone ends up buying a business that is not the right fit, it is not good for the franchisee or the franchisor. In the best-case scenario, they might somehow stumble through, but in the worst-case scenario, they could damage the brand’s reputation.
There are many benefits to buying or selling a franchise in Canada with the help of a business broker. They understand aspects of the franchise industry that you may be unaware of and frequently have access to not widely publicized information that can help you in your decision-making. Nevertheless, the job comes with a big responsibility, so it’s important to avoid those advisors with bad habits.