Why working with franchise brokers makes sense
I went to the Franchise Broker’s Association Annual Convention some time ago. Afterwards, I was in the Houston United Club on a layover, and I had a call with one of my franchisor clients. He was shocked to learn that we were working with franchise brokers. “They are so expensive! Why should they get $20,000 just for a lead?”
The commissions paid to brokers “just for a lead” are surprising to many would-be or brand new franchisors. For some reason the franchise broker/zor relationship can become occasionally adversarial. I have never understood this. To franchisors; franchise brokers are out there building YOUR brand. You are NOT paying them for just a lead; you are paying them because they are your brand ambassadors.
Below is an excerpt from my book How and Why to Franchise Your Business
that addresses the coach/zor relationship.
Brokers, coaches, consultants-they are known by many names. Basically, franchise brokers are responsible for generating their own leads, and they refer interested parties to franchisors.
I have heard it said that brokers just bring you leads that you would already get elsewhere. I can tell you that I have worked with franchise budgets in excess of $100K a month in lead procurement. I currently manage a budget close to $1mil/year, and in all my years of franchise development, I have only had one lead come through a broker and another franchise lead source.
If you chose to work with brokers, and I think most franchisors should, then you need to learn how. This is not a set-it-and-forget-it model, though it is often treated as such. It’s important to understand that most broker networks have several hundred franchisors in their portfolio, but most individual brokers have between 10-20 go-to concepts. To make it on this “short list,” the individual broker has to have a basic understanding of your concept, believe in it, and, most importantly, believe in your ability to get deals done. I recommend that, once you list with a broker network, you get in touch with as many of their individual brokers as you can. Share your passion with them. Learn about them. Find out how they are generating leads. Let them know whom they should be sending to you, and whom they shouldn’t. Most importantly, establish a relationship and maintain it. I also recommend that you invite the brokers to participate in your sales process for the first candidate they bring to you. This will give them a deeper understanding of your concept, and make them more likely to show your brand to their potential candidates.
Again, I am often shocked when I speak to the executives of some of the largest networks in the country, and they lament how hard it is to get the franchisors to engage with their coaches. The requisite investment in most of these networks will not pay dividends if you don’t engage.
Brokers are a lot of work, but in my opinion, they are worth it.
To learn more about working with franchise brokers and other key topics in franchising, check out How and Why to Franchise Your Business on Amazon