MEET THE SELLERS BEHIND YOUR FRANCHISE JOURNEY
In the game of finding a franchise, choosing the right guide for your journey can make all the difference in avoiding pitfalls and making a great match.
Not all guides are the same
During the franchise sales process, you may interact with franchise sellers who are employed by the franchisor, hired by the franchisor to sell franchises on its behalf, or both. The one thing they have in common is that they represent the franchisor, and while they may be helping you through the sales process – they do not represent you. Understanding the role of each guide—and knowing what questions to ask to assess whether their practices align with IFA’s Responsible Franchising Principles—is key to navigating your path to Finding a Franchise.
IFA wants to help you get started on your journey – and be with you every step of the way. Use this resource to understand the different types of franchise salespeople, questions to ask, and how to access free IFA tools to help you win at Finding a Franchise.
Know Your Guide
An employee of one franchise brand and represents that brand alone, in guiding a candidate through the sales process. They are compensated by the franchisor of the brand, typically by salary and commission.
Assists franchise buyers in identifying franchise opportunities based on the buyer’s goals, preferences, business experience and financial capabilities. A franchise broker may be a member of a “broker network”, which represents many (sometimes hundreds) of franchisors. Franchise brokers typically are paid a commission from the initial franchise fee when a franchise buyer purchases a franchise.
Typically represents a franchisor on an exclusive basis and operates as an outsourced franchise development department for a franchisor, shepherding the franchise buyer through the sales process to signing the franchise agreement. FSOs may be compensated in various ways, including commissions paid from the initial franchise fee, a share of royalties, equity in the franchisor, or other compensation structure.
Ask Questions:
One of the best ways to understand the different types of franchise sellers is to ask questions to understand their role in the sale process, their experience and results, how they represent brands and how they’re compensated if you buy a franchise. Here are a few questions to ask:
Are you employed by the franchisor, a broker or part of a franchise sales organization?
Are you a Certified Franchise Executive (CFE) or have you completed other training for franchise sales law compliance?
Have you ever been involved in litigation?
What industries and brands do you represent?
What services do you perform for franchisors?
Are you commission based? Do you receive any other type of incentive? Is it different for different brands you represent?
Which brands have you sold recently?
Are you/your organization members of IFA?
Independently Verify What You’re Told:
- Speak with current and past franchisees
- Engage with a franchise attorney to review the Franchise Disclosure Document
- Get third-party financial advice
RESOURCES:
To support your further learning, visit IFA’s What is Franchising online with free resources to help you learn about the franchise model, ways to conduct due diligence, questions to ask along the way, how to fund your franchise, considerations for making your franchise decision and more.