To Use a Franchise Broker or Not?

Author: shawna@frantechmedia.com

Date: NOV 5th, 2012

Topic: Industry Experts

The Canadian franchise industry is second in size only to the US, employing over 1.5 Million people. As a Franchisor you recognize the potential for growth in the Canadian market but aren't sure how to approach it? Are you considering using a franchise broker?

A franchise broker, or franchise consultant, acts as an negotiator between the franchise company and a potential buyer of a franchise.The topic of using Franchise Brokers is one of the most controversial in lead generation. Franchise Brokerage Networks now account for about 10% of all franchise sales.

Pros for selling franchises in Canada through a Franchise Broker

  • Brokers have a large network to work with. Their franchise advertising networks can reach thousands, possibly resulting in faster leads and sales than the advertising and marketing your franchise by yourself.
  • Brokers specialize in building professional business profiles for your franchise listing. This listing package should also include your equipment list, your asset list and your past and present financial statements.
  • Brokers are experienced with franchise pricing guidelines. This is important since some franchises do not sell simply because they are priced too high. Brokers are good at finding special financing options to offer potential buyers.
  • Brokers can save you time by making sure potential buyers are qualified to purchase your franchise. Because their goal is to sell your franchise, they will only refer qualified buyers to you who are ready to make you serious offers.

Cons for selling franchises in Canada through a Franchise Broker

  • They can be expensive. Some brokers charge upfront fees and ongoing monthly fees, as well as a sale percentage for their commission. This can be expensive to your franchise, especially if you have not sold a franchise yet.
  • Knowledge of franchise service and products. Some brokers may not be qualified to understand and deal with the requirements of your particular type of franchise. It is important to make sure your broker knows the in's and out's of your field in Canada.
  • Reaching buyers is easier than it used to be. Thanks to the internet, if you have the time, you can broker your own franchise effectively. There are numerous quality Websites and social networks that you can use to sell your franchise online without the help of franchise brokers.

Making the Decision

When deciding whether to use brokers to sell your franchises in Canada, it is important to base your decision on your marketing budget and the time you have to invest in the project. Here are two things to help you make a qualified decision:

  • If your main goal is to save money, you will have to put more time into selling your Canadian franchise to yourself.
  • If main focus is saving time, it may make more sense for you to use a broker who specializes in selling franchises in Canada.