Are the number of Franchise Consultants, and Brokers going to continue to grow? Or, as I predict, will this part of the Franchise industry start consolidating?…….
In the last 3 articles I have written about the phenomenon that is taking place..Too many consultant/brokers in the franchise world, and the plethora of new ones just entering an already crowded field. Here are links to Parts 1, 2, and Part 3, just in case you wish to refresh your memory.
Am I writing about this just because I am a franchise consultant? Am I writing about this because I do not want more competition? Am I writing about this because I just left a Franchise brokerage group that I really am not feeling the love for?
I am writing this to open up a discussion. I want to know how consumers feel about us. I want to know how franchise company execs feel about us. I am also writing this so that some prospective franchise brokers that are being courted by the franchise brokerage groups to buy their franchises that sell franchises to others, can take a breath..and find out before they buy, just what it is that they are buying.
Janet Sparks, a veteran franchise industry writer, just wrote about one such wonderful franchise company, “The Entrepreneur’s Source” that once again is is the position of defending itself against a class action lawsuit brought on by former franchisees. Article
They have a large number of franchisees, and at one time in little old Cleveland,Ohio, had 3-4 franchisees at the same time.
{As of this post, I only know of one franchisee in Cleveland who remains in business}
So, if “The Entrepreneur’s Source” as an example, has no problem selling 3 or 4 franchises in a shrinking metropolis like Cleveland, Ohio, multiply that by another 6-7 franchise brokerage groups that are trying to sell franchises of their own franchise brokering franchise, and you have some future headaches.
If you are reading this blog because you are thinking one day of investing in your own franchise as a way to “get where you want to go”, getting some advice and help makes sense. After all,there are over 3,500 different choices out there currently in franchising, and it does get quite confusing.
Here is the $100,000 question. Would you want to work with:
A. A franchise consultant/ broker who like you, just lost his or her job, and is now a “franchise specialist” after a 2 week training program/
Or
B. A franchise consultant/broker who possibly either owned his or her own business before, or one that came from the franchise industry, and is now in another part of the industry?
If you chose A, are you really going to be comfortable working with someone who is new, and who is really learning about franchising at the same time you are? Are you really going to be comfortable with
their suggestions on how you should invest your $150+ in this new business venture?
If you chose B, at least you have access to a large number of folks who have already worked with this experienced franchise consultant/broker, and can share their personal experiences with them.
However, working with an experienced franchise consultant broker won’t guarantee success. Just like in any industry in which consultants get paid for a sale is the model, stuff can happen.
The bottom line is that if you are thinking about getting into franchise ownership, and you don’t want to do it on your own, using the right person can be very productive. Get references.
If you are thinking about buying a franchise brokerage franchise, make sure you know what you may be up against. {An industry that is getting ready to consolidate}
I really enjoy what I do. I get to help others with their dreams of business ownership. I get to do a lot of public speaking. {I was graced with good pipes..Here is a radio interview }
I get to meet some really smart people! All in all, my life is pretty darn good……
Similar Posts:
- Franchise industry shakeout coming? {Part 3 of 4}
- Discount Real Estate Broker Franchises
- Franchise Industry Shakeout Coming?
- Franchise Industry Shakeout Coming? {Part 2}
- Example of making money in the franchise business
I am a Cleveland, Ohio based franchise expert/consultant who works with those in career transition {or about to be in transition} who may wish to explore opportunities in the franchise sector
Frankly, what you describe Joel is a problem in every industry, especially consulting. The entire range of players are in the game, from the low-end newbies to the high-end, ethical, overly-qualified professionals.
Frankly, from my experience, even the ones who think they are on the “high end” are no better at providing the final product/service as the less experienced person…they just think they’re better. Years of experience are mediocre indicators of how well any particular consultant can match up people with franchises. It’s not a knock on you, I don’t know you, but that’s just a general observation. It sucks because in your mind the differentiation between competitors is clear, and you think “If only the potential franchisee would understand the difference they’d choose me or my professional peers”. See every real estate broker/agent with the same complaints. I experience that in my own consulting business.
I think the franchise consulting industry should be EXACTLY like the real estate market. You have buyer’s brokers and seller’s brokers. They both should split the commission, have franchises listed on an MLS type system, etc. That’s my 2 cents.
Tom and Joel, I agree with your evaluation Tom as any consulting organizations generally have a range of abilities but most today don’t understand franchising enough to be a broker or consultants. I think the difference between the two is important. Most franchise brokers can say there a consultant and give advice on buying a franchise or a broker that basically sells if they can. Some try to match up as they do understand that referrals are basic to the system. The company that Joel was a part of basically were brokers with a leadership that didn’t in most cases qualify the approved franchises in the system. They usually based approval on high commissions. As many of these brokers would state is all they cared about was the money(unqualified greed). I know this organization well as I use to be a part of it. I reached a point that I was too critical as I would evaluate the franchises as to their standing in the marketplace in reference how well they utilized the Synergy of the market. I have often stated that almost all single franchises opened alone in an area will not survive in today’s completive market. If you evaluate the number of franchises it will take to penetrate the market to reach a point where the branding, advertising, PR, Training, etc. works and of course this all depends if the zors and zees use these programs effectively. This is a short version of all the components that go into a proper match up. In today’s franchise market most franchises are taking advantage of the zees and there is little hope that most can make it. On the Blogs and websites that report these ill conceived franchisers, this one and of course bluemaumau.com. and they are just the tip of the iceberg and this is the day of rip-off in the franchise industry as well as most business. If one looks at what the equity co’s. are doing to franchise co’s to bleed the wealth away from the franchise cos. as well as banks, retiring funds etc. something needs to be done to rescue the economy. I think you Joel I trying to do this but you need to understand how to truly evaluate these co’s your dealing with. I’ve always been very proud of the franchise industry and for many years I never sold a franchise that I knew that the client lost their investment. You notice I lost their investment not succeeded in making money. I know I said a lot and not all agree with me but in we are being to see the effects of the ripping off of the general public with the near run on the UK banking. Do you know how much was lost of the general publics money just in the Enron deal. Billions! Look at the leader of Blackstone equity which just bought Hilton and he is a billionaire. Of course many just say this is capitalism at work. Boy am I LONG WINDED. Look forward to all comments and hopefully can help to bring back true horizontal franchising. (another subject)
Thanks Don
Tom, Thank you for taking the time to put your thoughts down. Please..I do want to be a Realtor. I don’t have the patience required!
Don,
Thank you, also. Although i won’t be drawn into a discussion about my past association with _____net, I agree that when it comes to business, there are some pretty greedy folks out there. I too, ONLY work with franchise companies that I would intro to a family member…that is how good, I FEEL they must be. It is till up to my candidates to due the proper and intelligent due dil required. It is their money. I just show them the path, and teach them how to traverse it.
Joel Libava
It was written:
Frankly, from my experience, even the ones who think they are on the “high end” are no better at providing the final product/service as the less experienced person…they just think they’re better. Years of experience are mediocre indicators of how well any particular consultant can match up people with franchises. It’s not a knock on you, I don’t know you, but that’s just a general observation. It sucks because in your mind the differentiation between competitors is clear, and you think “If only the potential franchisee would understand the difference they’d choose me or my professional peers”. See every real estate broker/agent with the same complaints. I experience that in my own consulting business.
My reply:
If someone think they are good, I challenge them to do what I do.
I can account for every dime that has flown through my concern since 1994. Prospective clients can “see” how much I earned per client, the names of the clients and these are correlated to my resume. Every client is accounted for, with a description of the services provided, a evaluation from the client as well as unsolicited additional commentary from the client and current contact information. They can see with their own eyes, how I earn my living, every client, the duration of the engagement and ultimately the outcome as defined by the client at the close of the contract, 6 months, one year, and 18 months later.
The advantage of this is one of comfort for the prospective client. They know what they are getting into, they know they aqree hiring the best, and they understand my justification for my rates. Basically it is supply and demand. I can command a premium to market because I have demonstrable track record of success that is in demand.
As Rush Limbaugh says, it is not bragging if you can back it up.
If I was a franchise consultant, this is how I would proceed. Leading with my success or discounting or working for free until I obtained my first clients and thoroughly document any “learning experiences” that occur with commentary so I do not have to hide my journey to competency at a later date.
Regards,
FuwaFuwaUsagi
Fuwi Fuwa!
We agree!! Which is why the folks that CHOOSE to work with me get to meet and talk with others that I have helped.
{And even ones that haven’t gone into a business of their own after working with me, but still think the world of me..}
That way they can learn from others why I am THE to work with.
For new franchise brokers and consultants entering this crowded field, the suggestion of doing this for free is a great one. You will be anyway, for the first 9 months to a year.
Franpro
You said that there are so many franchise inquiries every year, doesn’t that make for a good industry for brokers? Exactly how many franchise requests are pulled in a year by the industry? I saw that restaurants seem to be the biggest, do you have a good approximate?
Mike,
As with most small business information that is available via the internet, there is serious information overload in the franchise industry.
There are not as many inquires this year, as opposed to last year.
As for inquires specific to restaurants, in my business, about 60% of franchise inquires are related to the franchise food industry. It is the most visible and well recognized franchise type.
Joel Libava
The Franchise King Blog