Why should you consider franchise brokers to grow your network?

According to the 2008 Annual Franchise Development Report published by the Franchise Update Media Group, in 2008 16% of franchise sales came from brokers. This is a significant percentage; 16% is nothing to dismiss, at least not in my book.

It is true that brokers and similar referral sources charge large commissions, but they also sift through many, many leads that most likely you would have ignored as tire kickers. They truly earn those commissions.

Before you dismiss the idea of using brokers to supplement your franchise recruiting efforts, review your objective. Is it to net the most money you can from franchise sales or is it to grow your franchise network? I know what you’re thinking; you’re probably saying: it’s BOTH. But, before you steer away from using brokers, consider the following 3 points:

  • The franchisees that brokers bring would probably not have come to you through other methods.

I think this is one of the most important arguments for considering using brokers. People who tend to seek the assistance of others normally won’t use multiple approaches; that is, in general, they will let the broker guide them and won’t search on their own. And, even if they do, what are the chances that they will find your opportunity among the thousands of franchises out there? Additionally, most people who seek the guidance of others tend to be good at following a system and listening to others. These two characteristics make them excellent franchisees.

  • Franchise fees are meant to recover your initial investment and recruiting costs; they are not profit sources.

Many franchisors forget this important point and turn franchise recruiting into their main profit center. This is a dangerous trap because it leads to disregarding the franchisee profile and granting franchises to any prospect who has the money. This lax approval process leads to failing franchisees which in turn ends up affecting recruiting. It becomes an ugly and expensive vicious circle.  Franchise fees do help every franchisor with cash flow, but profits must come from other sources for the franchise to be a sustainable enterprise.

  • Once you have established a strong relationship with brokers, leads will flow without much effort.

The key to getting the desired results from brokers is in building strong relationships. There is a heavy initial time investment in getting to know them and helping them understand your franchise opportunity. However, once these relationships are established, maintaining them is as easy as checking with old friend.

Don’t prevent your system from growing as much as it can just because you want to hold on to the money. Have a multi-prong approach to franchise recruiting and add brokers to the mix. Successful broker networks include: The Entrepreneur’s Source (a coaching organization), FranNet, FranChoice, and MatchPoint. There are many independent franchise brokers as well.