Picking up from last time, planning is critical to the outcome of your franchise sales program. You must establish your franchise sales goals and then develop a strategy to reach those franchise sales objectives.

After developing your franchise sales strategy, determining your franchise sales objectives and planning how to reach your targets, you must decide who will be responsible for your franchise sales program.

Typically, you have three options for who is going to spearhead your franchise sales efforts, including:

  • Having the franchisor’s owners and/or manager perform the franchise sales function
  • Utilizing a franchise broker or external franchise sales force
  • Employing an internal franchise sales person
  • Let’s assume the franchise company’s owners/managers want to explore the option of utilizing an outside franchise sales representative. There are positives and benefits to this approach.

Outside Franchise Sales Pros/Cons

The pros of retaining an outside franchise sales broker are:

  • An experienced franchise sales broker is familiar with franchising in general and has specific understanding of franchise sales.
  • Franchise brokers usually earn a percentage of the initial franchise fee. The franchisor typically does not incur significant sales expenses until the franchise sale closes.
  • Because they represent various franchise companies, franchise sales brokers often are working with a number of prospects they can send your way.

The cons of retaining an outside franchise sales broker include:

  • The commission is usually a third to a half of the initial franchise fee and can be over $10,000 to $20,000 per franchise. Some franchise brokers require you to give them a share of the royalties paid by the franchisees as well.
  • Even if the franchisor is unaware of an assertion or has forbidden the broker from claiming something, legally, the franchisor is responsible for any claims or misrepresentations the broker may make.
  • Not being involved in the franchise sales process may limit the franchisor’s knowledge of this critical area in terms of what is working and what is not.

More on franchise sales next time…

If you would like to speak with one of our franchise consultants today, please don’t hesitate to call (706) 356-5637!