The franchisor franchisee relationship can be an extremely profitable venture on both sides, but investing in a franchise that is the wrong fit can also be disastrous for both parties. As businesses grow and there are more and more investors coming into the market looking for a franchise to invest in, finding the right fit becomes increasingly more challenging. That’s where using business consultants or brokers can make a lot of sense both for the franchisor and for the franchisee.
Why business consultants are valuable to franchisors
Business consultants can save franchisors a lot of time and money by pre-screening potential investors and ensuring those they send forward for consideration already meet the criteria that the franchisor is looking for.
Since it is highly important that the consultant understand each business model of the franchises that they represent, regular communication between the franchisor and the consultant is necessary. The broker is then fully able to do much of the leg work in ensuring that applicants have the proper skill set, background, financial positions etc.
Why business consultants are valuable to franchisees
Franchises in Canada cover a wide range of industries and business models. For an individual person to start wading through all the information that is out there, can seem like an insurmountable task. Business consultants generally have a large list of franchises that they represent – and since they are well versed in each of those franchises’ business models, they can quickly weed out opportunities that are not the right fit and assist candidates in finding the franchises in which they stand to be the most successful.
This not only saves the potential franchisee a great deal of time, but it can save them a lot of money by preventing them from the costly mistake of investing in a franchise that is a poor fit. Remember, just because you like a certain product or service, does not mean that it’s the right investment opportunity for you.
The consultant’s fee
Many first time franchisees are surprised to learn that they pay nothing for the valuable services of the business broker. Since commissions are paid exclusively by the franchisor, it is hard to imagine why a potential franchisee wouldn’t at least consult with a broker.
Reputable business consultants will never try to push an unsuitable business on an investor. Their long term relationship with the franchises that they represent is worth far more than the commission from a single sale.
The consultant’s network
Especially if you are investing in a franchise for the first time, the network of the business consultant can also provide incredible value. Purchasing a franchise can be a complex process and at some point, you will likely require a lawyer and accountant with specialized knowledge in the franchise industry. You’ll also need to source financing.
Instead of trying to find these experts on your own, it helps if you can rely on someone who has the right network and the right connections. Business consultants typically have a referral network of such experts who can help you as you embark on your adventure in franchising.