Giving franchises a hand
I’m interested in starting a business that provides advice and research to potential franchise buyers. Are there any franchises I could purchase that use this business model? Can I start one?
Answer: There are several existing franchise brokerages — some independent and some franchise operations — that advise investors and would-be business owners about franchising. Typically, these firms are founded and staffed by past or present franchisers, franchise executives, franchisees, franchise developers and other professionals in the market.
Most of the firms offer free consulting services to potential franchise buyers, said Nancy Ghanem, chief executive and founder of Franchise.com, a consulting firm based in Encinitas.
“The consulting typically consists of education, financing options, franchise loan preapproval letters, preliminary franchise settlement sheets and matching up would-be franchise owners with the franchise operations that are determined to offer the best prospects for success,” she said. Revenue for these consulting firms typically comes from franchisers who pay for qualified sales leads.
One complaint about this business model, Ghanem said, is that some brokers may be matching prospects to the franchise systems that pay best and overlooking operations that might offer investors more potential for success. To eliminate this conflict of interest, some outfits, including her service, FranFit.com, charge franchisers a flat fee for participating on their sites.
Assuming you have a background in franchising, think about working for a consulting firm before you take the financial risk of opening your own firm or buying a franchise. Other consulting firms include FranChoice Inc. and FranNet. Groups that can also help are the American Franchisee Assn. (www.franchisee.org) and the International Franchise Assn. (www.franchise.org), which offers an online course called Franchising Basics.
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