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Franchise Broker vs. Consultant vs. a Hybrid

Are there Pricing Guarantees for Veterans in Franchising?

In the business world, having the right skills and abilities is essential to starting and running any business including franchises. Veterans are no different in regards to needing those skills to be successful in the franchise marketplace. They expect no different treatment because they were Veterans but usually get it anyway because of their responsible nature and their commitment to excellence which makes them great franchisees. Veterans interested in the franchise marketplace are just as savvy as any other franchise candidates and must be thorough about their franchise selection process.  So why do they need a franchise broker or consultant to get their deal done?  What are the advantages, disadvantages and economic considerations for selecting either or neither?  Are there really any guarantees on price and service?

So what’s the difference between a franchise broker and consultant? Although each franchise transaction could benefit from either a “Consultant” or a Franchise Broker, for purposes of this article, we define a Franchise Broker as someone who has a contract with a franchisor and receives a fee from that franchisor if your transaction closes. A Consultant solely represents your interests and receives a fee directly from you for his/her advice. Often both Consultant and Franchise Broker roles are erroneously used interchangeably and Franchisor Broker fees are typically framed as free because their paid by the franchisor.

As everyone knows the term free often has its price. The “price” you pay  in your transaction may be that your receive limited exposure to other franchise opportunities because your Franchise Broker doesn’t have a contract on that opportunity and/or simply doesn’t promote it to you  or compare it to other similar ones.  With a Consultant you typically pay upfront or at least on an ongoing basis for trusted advice. In either case there are “costs” to your transaction. So even if a Franchise Broker has multiple contracts with various franchisors there’s ultimately going to be some bias towards those franchise companies. There’s nothing sinister about that as long as it’s disclosed to you. So the Veteran’s job is to illuminate and mitigate any bias and still get professional advice you desire or alternately pay for a Consultant you trust directly.

Whether you choose a Franchise Broker or a Consultant or neither, you should do so because you believe that decision can add to your process of selecting the most suitable franchise for your ultimate success. Third party industry knowledge and due diligence experience can be critical for your selected franchise idea.

Many Franchise Brokers/Consultants do have in depth and real time knowledge of what’s happening in the marketplace for your particular opportunity and your prospective franchisor selection right now, not last year. And if they don’t they must be able to develop a credible plan to guide your own due diligence toward a rational go/no go decision. In the end you are ultimately responsible for your own due diligence.

Franchise Brokers/ Consultants will of course want to get to know you; to qualify you and undoubtedly have one or more conversations with you over the phone. They will ask about your previous business experiences and your goals for business ownership. At that same time you should be asking them direct questions about all fees and how they or you might benefit and how they will obtain the best prices and values for you. What sort of financial advantages can they provide on a franchise acquisition? What sorts of discounts on franchise fees may be available directly from Franchise Brokers?

Discounts outside of the Franchise Broker’s Franchise Directory                         

Veterans have earned the right to benefit from any and all incentives available to them in the franchising marketplace. All Franchise Brokers should perform research to find out what additional franchises incentives are available to the Veteran outside their typical contract relationships, not only discounts through great programs like VetFran.

At Veteran s Business Services (VBS) we always agree to research any and all potential Veteran franchisor opportunities that are pledged to supporting Veterans. VBS, as part of the Veteranscorp.org social enterprise, commits to do this whether it earns a fee or not.

VBS believes all Franchise Brokers must be willing to reach beyond their own in-house Franchise Directory to support Veterans in franchising. VBS connects Veterans to any and all opportunities they choose and also provides a guarantee that the Veteran will receive the best prices for franchise fees available in the US marketplace.  VBS is also committed to the continuing success of Veterans we have placed in franchises by providing ongoing marketing support and pledging at least 20% of our franchise broker revenues directly to the Veterans we place.

Whether a Veteran chooses to work with a Franchise Broker or a Consultant or pursue a hybrid approach to due diligence and price negotiation, at the end of the day that Veteran makes all the final judgment calls about the best deal for him/her. And even if a hybrid arrangement for Veterans might offer good advice and a price advantage too, making that decision comes down to a matter of trust.  So it might make sense to work with someone who has “borne the battle” but getting that price guarantee wouldn’t be a bad thing either.

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