What Do Franchise Brokers Do?

Franchise brokers are employed by franchise companies to sell franchises. If you are looking at franchise opportunities, sooner or later you will encounter a franchise broker.

Using a broker

will not cost you anything, but brokers earn a commission only when you buy a franchise from one of their clients. When you sign your franchise agreement, the broker will typically earn 40 to 50 percent of the franchise fee you pay. In some situations, brokers may earn a percentage of your payments if you purchase additional franchises later, and they may even earn a percentage of the continuing royalty payments you make.

Using a broker to help you invest in a franchise is much different from using a broker when you buy a house. When you purchase a home, the homeowner pays a commission of approximately 6 percent, which is shared by the listing broker and the selling broker. The selling broker works for you, the home buyer, and can show you all the houses in the market where you want to live.