Franchise Consultants

Franchise consultants serve as liaisons between business trademark owners (the franchisers) and new members looking to get in on the franchise (the franchisees). Because business law and practices as it applies to franchises is such a mutable concept, the market has seen the rise to prominence of the franchise consultant.

Using franchise consultants has become the standard way to bring serious buyers and sellers together, much in the same way that real estate agents streamline the process between home owners and home buyers. They often work in tandem with a franchise attorney and accountants who keep track of the earnings potential and who-owes-what-to-whom. Some attorneys also branch out into franchise consulting. Franchise consultants nimbly navigate the complexities of finding matches for each franchiser and franchisee.

Similar to real estate agents, franchise consultants charge no fee to the buying party, instead collecting their pay from the company which is selling franchise licenses. This fact is a point of consideration; if you are buying into a franchise, you should be aware that the consultant makes a commission of sorts on the sale and so has a motivation to sell. If you are a license owner looking to sell franchise contracts, the consultant is “working for you”.

One of the functions of a franchise consultant is to help the business owner estimate the value of a franchise license. Not every business is a viable candidate for franchising: simple consumer goods and services do well here, such as restaurants, florists, clothiers, chain stores, and easily packaged services. But some kinds of businesses aren’t well-suited to franchising, particularly if they require professional trades and expert knowledge.

Franchise consultants examine the business and try to determine if it exhibits the characteristics of a good prospect. They may ask if the business has a good track record of profitability, if it has broad geographic appeal, if it is fairly easy or inexpensive to operate, and if it is easily duplicated. For instance, Western Union is a business easily suited to franchising; they sell their services primarily as a communications network and therefore all they need in any given town is an endpoint to throw and catch money transfers and the like. Once they set up the equipment and plug it in, anybody can be trained to mind the store. Chain stores and retail outlets are also a prime candidate for franchising, since what they are selling is a product which is easily transported to the retail location from a central supply point. All they need is a storefront and a smiling face behind the counter.

To the prospective franchisee, the consultant can help them to assess the profit potential for a franchise, assist in finding franchise opportunities that match the skills and ambitions of the franchisee, and the day-to-day work of managing the franchise business successfully.

Part of the franchise consultants’ job should also be to assess the local market to determine which kinds of businesses will be best suited to the area. Obviously, you shouldn’t be metaphorically selling sand in the desert or ice at the North Pole. It is the franchise consultant’s responsibility to ensure that at least the majority of the people they set up in business do well - for instance, by picking an area where there isn’t much local competition for that type of business, ensuring that there is demand for that product or service, and having some reasonable expectation that the franchisee is qualified to run that station or retail outlet.