What is the Difference Between Outsourced Franchise Sales and Franchise Brokers?
Outsourced franchise sales and franchise brokers are two distinct approaches that franchisors use to expand their franchise network. While both methods aim to attract new franchisees, there are significant differences between the two:
1. Outsourced Franchise Sales
Outsourced franchise sales refer to the process of hiring an external sales team or agency to handle the entire franchise sales process on behalf of the franchisor. This external team takes on the responsibility of finding and qualifying potential franchisees, guiding them through the discovery process, and ultimately closing the franchise deals. The outsourced sales team typically works under the franchisor’s brand and follows the company’s sales guidelines and procedures.
Advantages of Outsourced Franchise Sales:
- Expertise: Outsourced sales teams are specialized in franchise sales, bringing valuable expertise and experience to the process.
- Scalability: Outsourced sales teams can quickly scale up or down to accommodate fluctuations in the demand for franchises.
- Reduced Burden: The franchisor can focus on core business operations while leaving the sales process to the external team.
Disadvantages of Outsourced Franchise Sales:
- Cost: Outsourced sales services come with a price, which may be a significant upfront expense or a commission on each successful franchise sale.
- Control: The franchisor may have less direct control over the sales process and the representation of their brand.
2. Franchise Brokers
Franchise brokers, also known as franchise consultants or brokers, are independent professionals or agencies that assist potential franchisees in finding suitable franchise opportunities. They act as intermediaries between the franchisor and the prospective franchisee, helping the candidate navigate various franchise options based on their interests, investment capabilities, and skillset. Franchise brokers earn their commissions from the franchisors when a successful franchise sale is made.
Advantages of Franchise Brokers:
- Matchmaking: Franchise brokers provide personalized assistance to potential franchisees, helping them find the best franchise fit for their individual preferences and financial capabilities.
- Industry Knowledge: Brokers have insights into various franchisors and can provide valuable information about different franchise opportunities.
- Support for Franchisees: Brokers continue to support the franchisee even after the sale, guiding them through the onboarding and training process.
Disadvantages of Franchise Brokers:
- Limited Control for Franchisors: Franchisors may have limited control over the marketing and representation of their brand by the brokers.
- Commission-Based: Franchise brokers work on a commission basis, and the cost is borne by the franchisor.
In summary, outsourced franchise sales involve hiring an external sales team to manage the entire franchise sales process on behalf of the franchisor, while franchise brokers act as intermediaries, helping potential franchisees find the right franchise opportunities. Both methods offer advantages and disadvantages, and franchisors need to carefully consider their specific needs and goals before choosing the approach that best aligns with their business strategy.
For more information on how to work with franchise brokers, contact Strategic Franchise Brokers: