Purchasing a franchise marks a major business and financial commitment. Hiring an experienced franchise consultant provides valuable guidance navigating the complexities of researching, buying, launching, and growing a profitable franchised business. This guide examines the types of consultants, services provided, and how pro consultants can contribute expertise to franchise success.
We’ll cover how consultants support the franchise process from brand selection and due diligence to negotiations, launch, operations, and beyond. Understand how consultants earn their fees by enabling smarter franchise ownership.
Table of Contents
Franchise Consultant Definition
A franchise consultant is an advisor offering specialized services to assist potential franchisees. Consultants provide advisory support related to:
- Franchise brand research and selection
- Business ownership suitability assessment
- Discovery and due diligence procedures
- Documents review and negotiations
- Location selection optimization
- Vetting suppliers, vendors, real estate
- Advice structuring financing and growth planning
- Assistance preparing training and launch
- Ongoing operations, processes, HR
- Performance evaluation and improvement
Experienced consultants supplement the buyer’s capabilities across the wide spectrum of franchise ownership needs beyond just an initial investment.
Key Franchise Consultant Services
Franchise advisors deliver expertise across four primary phases:
Pre-Purchase Services
- Profile goals and experience to match appropriate franchise opportunities
- Provide guidance on franchising pros and cons
- Introduce reputable brands to consider within industries of interest
- Guide due diligence on earnings claims, leadership, compliance, and support
- Help interpret FDD disclosures and complex legal agreements
- Present questions to ask franchisors and franchisees
- Assist negotiations of terms and contracts
- Vet franchise broker promotions to avoid bad matches
Launch Planning Services
- Consult on real estate and buildout considerations
- Provide insight on operating systems, processes, and tools
- Advise planning training, staffing, and insurance needs
- Guide site selection, lease review, and relations with vendors
- Assist securing financing and growth capital
Opening Services
- Coach executing franchise training and onboarding
- Help prepare for launch, systems setup, and grand opening
Ongoing Operations Services
- Provide ongoing advisory services as needed
- Review financials and operating performance periodically
- Identify strengths, weaknesses, and enhancement opportunities
- Strategize growth planning for additional units
- Consult navigating renewals, transfers, or exit planning
Franchise consultants become trusted advisors with insight that benefits you before, during, and after ownership.
Ways Franchise Consultants Add Value
Specifically, consultants add expertise in areas like:
Brand Research – Consultants often maintain databases of 200+ franchise brands to match candidates with ideal opportunities. They accelerate due diligence.
Industry Experience – Former franchisees and execs have insider perspective on realistic challenges and upside. First-time buyers lack this context.
FDD Review – Consultants flag key disclosures, explain legalese, outline obligations in the FDD and franchise agreement that buyers may overlook.
Process Navigation – The protocol to research, apply, evaluate, negotiate with franchisors and launch can be foreign to newcomers. Consultants prevent missteps.
Vendor Relationships – Consultants provide access to trusted partners for real estate, construction, financing, legal services, HR, IT and more based on past client success.
Operations Optimization – Consultants apply years of experience to help streamline operations, manage costs, drive revenues, and improve overall franchise performance.
Objectivity – Franchise consultants offer unbiased guidance oriented around your success, not upselling you on franchisor promotions. They check unrealistic expectations.
By augmenting franchise buyers’ knowledge, consultants accelerate smarter decisions and enable focus on priorities for smooth acquisition and opening. Their broader view spotlights opportunities and pitfalls.
Types of Franchise Consultants
Consultants have diverse backgrounds and services including:
Independent Consultants
- Solo advisors who have held executive positions in franchising
- Provide services independently based on their personal expertise
- Hourly or retainer fee-based engagements
Consulting Firms
- Teams of advisors across specialties like legal, finance, operations
- Offer bundled services under one firm
- Work with mid-sized to large franchisees
Franchise Brokers
- Aid brand discovery and narrow options but also earn commissions
- Some may guide negotiations and planning like true consultants
- Beware bias toward brands paying higher commissions
Franchise Lawyers
- Attorneys with franchise agreement expertise advise on legalities
- Vet agreements and flag obligations for buyers
- Do not provide operational guidance
Business Brokers
- Assist buying or selling existing units; limited new franchise advisory
- Have access to resale listings not readily visible to buyers
Assess the consultant’s specialty in relation to your franchise needs. Define clear expectations of services to be delivered.
When to Hire a Franchise Consultant
Ideally, engage a consultant early when exploring franchising. But their services provide ongoing value including:
During Initial Franchise Research
- To gain expert insights on brands and industries
- For an objective second opinion validating options
- To avoid poor matches and red flag risks
Through Due Diligence and Document Review
- To accelerate due diligence before committing
- To negotiate better contract terms
- To interpret dense FDD disclosures
Approaching Franchise Application and Purchase
- To refine the business plan, growth plan and strategy
- To prepare for brand training and onboarding
- To finalize real estate, buildouts, financing and suppliers
During Launch and Opening
- To ensure systems setup goes smoothly
- For training guidance and operations optimization
Ongoing Operations and Growth
- For continual performance improvements
- To drive profitability and maintain brand standards
- When exploring additional units or transfer/resale
Ideally engage a few months before purchase. But consultants help optimize success during ownership too.
Evaluating Franchise Consultants
Not all advisors offer the same caliber of services. When assessing franchise consultants, ask:
- What is your precise experience in franchising as an owner, executive or broker?
- How many brands have you worked with directly? How many franchisees have you advised?
- Can you provide client references vouching for your value to franchisees?
- Are you a consultant, broker, lawyer or other role? Understand how they earn fees.
- Do you focus on specific franchising industries or types of opportunities?
- What ongoing support do you provide after the initial purchase process?
- Do you have access to vetted partners like real estate firms or lending partners?
- How do you remain up-to-date on brand performance, rankings, and franchise best practices?
- What is the precise process, timeline and fees for complete services? Get engagement scope and rates in writing.
Look for relevant insider expertise – both franchisor and franchisee side – along with strong communicators who ask incisive questions. Define clear deliverables.
Costs of Hiring a Franchise Consultant
Consultant fees vary based on services, involvement, and duration of engagement. Typical structures include:
- Hourly Consulting – Rates ranging $150 – $300+ per hour. Capped at a set number of hours.
- Monthly Retainer – Flat monthly fee for advisory access (ex. $2,000 per month). Minimum term of 3-6 months generally.
- Project Fees – Flat rates for specific defined projects like location review, FDD analysis, negotiations, etc.
- Percentage of Transaction – Some consultants earn 1-3% of the total franchise purchase amount.
- Ongoing Performance Fee – Periodic fee for ongoing operations advice based on key metrics or gross sales.
Factor in any broker commissions if they provide consulting. Lawyers charge hourly typically for individual document reviews. Carefully define fee structure upfront in signed contracts and scope of services.
FAQs About Franchise Consultants
Here are some frequently asked questions:
Are franchise consultants worth the cost?
Specialists can help buyers avoid costly mistakes from lack of experience. Their fees often pay for themselves multiples times over through wiser selections, negotiations, and operational optimization. But assess expertise.
When should I hire a consultant?
Ideally very early in exploration to guide initial planning or soon after deciding to pursue franchise ownership to aid vetting brands, contracts, planning and launch.
What results do consultants actually deliver?
Experts provide education, introduce options, speed due diligence, assist negotiations, refine strategy and planning, optimize setup, and enhance operational execution. But benefits depend on client collaboration.
Do I have to pay consultant fees if I don’t buy?
Usually not if you do not purchase. Many charge hourly only as services are used. But some may ask for a small retainer. Get fees in writing upfront.
Can consultants get me better deals?
Experts can often negotiate improved contract terms, royalty rates, or exclusivity rights based on past client successes. But established franchisors rarely negotiate drastically.
Are consultants just salespeople earning commissions?
Some may earn referral fees. But true consultants act in your interest as advisor, not just selling franchisor promotions. Determine how consultants earn their income to assess potential bias.
Leverage Proven Franchise Expertise
Given the major commitments involved in franchise ownership, utilizing an advisor with proven franchise expertise is wise for most newcomers to accelerate success. But vet consultants diligently – a long corporate resume alone does not equal real franchisee value. The right guidance provides objective insights that can mean the difference between dream outcomes or distress.
