Ryan is an attorney and valuation specialist residing in Chicago. He chronicles his thoughts and research on FranchisePundit.com. You may reach him by email ryanknoll@gmail.com or mobile telephone 312-212-3423.
One company has about $8 million in sales with 10 employees in the franchise industry, and was just acquired for $21 million. No, it’s not PostNet, Great Wraps, or American Male, it’s the franchisor-advertising web site – Franchise Gator. Most of their money is earned with listing fees and click throughs to the franchisors’ web site, I’ve heard earnings of $30 per click among other arrangements.
On a related note, potential franchisees should always be aware how people are getting paid. A “consultant” or “independent rep”, for example, are generally paid by the franchisors essentially on 100% finder’s fee. When the consultant or rep only gets paid after you buy pay a franchise fee, do you think they have the franchisees’ best interests in mind or are they biased toward their own commission? What about the good franchises that refuse to pay the fee or those franchisors who pay the highest fees, do you think that influences their recommendations? Do you think sites like franchisegator.com who highlight franchisors with “Franchise of the Month” and “Franchise Spotlight” do it because those spots are paid for by franchisors? Don’t kid yourself, follow the money.
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