How To Achieve Success As A Business Broker For Franchisees
As a business broker for franchisees, it is your responsibility to find suitable opportunities for those wishing to start their own business under the franchise model. But this is only part of the equation. There are certain skills you should hone and laws that should become familiar to you as you navigate the process of narrowing down the right opportunities for your clients and mediating the discussion between the two parties to reach a fair agreement for both the buyer and seller.
Follow the tips below to find out how to achieve success as a business broker for franchisees.
Bone Up On Your Business Knowledge
Since franchising is all about owning and running a business, you need to be well versed in every aspect of business ownership including:
- The financial health of each franchise you present to your clients
- The projected costs of opening a location in the local market
- What running each type of business involves
- The level of support offered by the franchisor
- Anything the franchisor requires from franchisees to start, expand or buy a location
- The state of the market in which they would open the location
- The number of competitors in the market and details on all of them
Remember, you are representing your client, so you need to present thorough, accurate and up-to-date information. This will give them a fair shot at making the right decision and increase the chance they will either use your services again in the future or recommend you to others.
Practice Active Listening
While the main function of a business broker for franchisees’ job is to match franchisees with franchisors and assist franchisees in the purchasing process, your clients are the final decision makers. They may not feel the same way about a franchise as you and you must respect the difference of opinion.
It starts with active listening. You are the middle man, so make sure you listen carefully to both your client and the franchisor. This will ensure you truly grasp the needs and requirements of both parties. It also allows you to deliver accurate information to both parties and prevent any potentially disastrous misunderstandings.
When you are dispensing information, do so in a clear, straightforward way to help avoid confusion that could prove costly down the road. Be prepared to answer as many questions as your clients and the franchisors ask.
Sharpen Your Presentation Skills
Once you have gathered all of the necessary information about potential franchise opportunities, you must present it to your client in a clear and concise manner. Make sure they understand all of the possible outcomes so they can make a fully informed decision. Observe their reaction; if they do not seem to comprehend what you are telling them, explain it again, perhaps in a different way.
You can convey the information verbally, via typed notes or via a PowerPoint presentation. As long as your client is made aware of the essential information, you will be in good shape.
Maintain A Sense Of Organization
At some point, every business broker for franchisees inevitably finds themselves representing multiple clients simultaneously. You will need to be very organized in order to keep everything straight.
Formulate a plan for allocating your energy, time and resources evenly among your clients. You will need to execute tasks such as conducting research, making presentations, attending meetings and drafting proposals for all of them.
That said, you may end up with clients that are high maintenance and clients you rarely see. If this is the case, just make sure you are balancing your schedule as much as possible.
Recommend The Right Type Of Financing For Franchises
Your clients may rely on you to help determine the right type of financing for them. While you may know a great deal about the available financing options, you may work with clients who do not have an inkling of it of the various types.
Commercial Bank Loans
The most traditional type of loan is term loans, which are issued by banks. The application process for bank loans is rigorous, typically consisting of a review of your personal credit history and your business plan. If you are approved, you must repay the lump sum of cash you receive in monthly installments within a certain window of time as dictated by the bank.
The Small Business Administration (SBA) guarantees a portion of the loan amount for the financing they provide. This makes them highly desirable because it motivates lenders to approve more loans than they might otherwise. However, they impose stringent qualification standards and require a lengthy application process.
Franchisor Financing Program
In some cases, franchisors will offer financing options tailor-made for their franchisees. These arrangements differ from company to company and are based on the needs they anticipate their franchisees will have. These loans typically cover franchise fees. Some cover the costs of starting a business, as well.
Alternative Non-Bank Lenders
If your clients want to avoid a lengthy approval process, rigid requirements and putting up personal and ancillary collateral, financing your franchise through an alternative lender may be the best choice for you. The majority of these loan products tend to have shorter repayment periods and are a bit more expensive, but some lenders do offer a low-interest rate. Plus, there are a variety of loans available in a wide range of dollar amounts from $100,000 to over $2 million.