Franchise Brokers Do Fail
One of the biggest myths or claims made my some of the franchise broker networks are that their brokers don’t fail. Uh really? So they are the one thing in the world that has a zero percent failure rate?
Perhaps we should define failure and then explain how this is a myth and why some make the claim. In the world of business, including franchising one might define failure as closing the doors, firing the employees, selling the equipment and even declaring bankruptcy right? In the world of franchise brokering there are no doors to close, no employees to fire and while it is possible, few declare bankruptcy due to their decision to become a franchise broker. They just quit doing it.
With groups like FranServe and Business Alliance there are no ongoing fees except a royalty which means once a broker pays the $20k – $25k to join they remain in the database of brokers regardless of their success or failure. Unless of course they specifically request to be removed.
For this reason, one of these groups doesn’t know or doesn’t claim that some of their brokers did not succeed and give up… Another way of saying “fail”. With these groups, once a broker always a broker regardless of whether or not they succeed.
That being said, we recently sent emails to 120 brokers with Business Alliance. Of the 120 emails sent 36 of them bounced which was a decent indicator they were no longer in business. We did not test FranServe but a common statement from franchisors is they get plenty of bounced messages and “oh I’m not doing brokering anymore” when they reach out to their network. So again, failure or gave up, tomato tomaaato.
Groups like IFPG and SuccessFran do also have brokers that fail but since their model is based on a monthly fee membership their roster of brokers tends to be more accurate as when a broker decides to give up and move on obviously they request to cancel their monthly fees.
All industries have failures! Don’t let that scare you but the common claim made by some broker groups that “our brokers don’t fail” just isn’t true and defies all common sense.