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"16 years later everybody and their cousin is a so called franchise consultant"
Editor's Note: Joel Libava, known here as "Franpro", is one of Blue MauMau's earliest members and until just a few days ago was a franchise consultant for the Cleveland, Ohio area with FranNet, one of the industry's largest network of franchise brokers. He now heads his own franchise consultancy.
After a 6.5 year ride, I have left the Franchise Consulting group I was a member of, Frannet. My late father, Jerry Libava (pictured), was one of the original members, joining Frannet back in 1991. My Dad was in the corporate world for a stupid amount of years, traveling 4-5 days a week, almost all the time. His last "job" was as the Franchise Dev. Director of Physicians Weight Loss Centers , based near Akron, Ohio. The Federal Trade Commision came down hard on the diet industry in the late 80's, and Dad was downsized.He had a kid in college (Not me, I was learning things the hard way at the time), and normal debt like anyone else, but he said:
"Enough is enough! No more corporate America for me!" So he decided to get into business for himself. His business was called International Franchise Development, which he and my Mom named during a ride in the country. He started his business, found out about a guy by the name of Howard Bassuk , who was based out of San Diego, and he joined Howie with a few others. They were the pioneers of the Franchise Consulting Industry. Howie was the brains (Genius level),and 5 or 6 guys at the time were the brawn.
My father helped lots of local area residents get into business, and stayed active until 2000-2001.
I was downsized about that time {2000-2001}, from the automobile franchising sector, where I was in sales and management, and knew by that time what I didn't want to do anymore, which was working for others. My Dad offered to train me in his business, and after some deep self-thought, I decided to give it a shot. Well, I have to tell you, it was the best decision I have ever made in my career. I am now doing things on my own, in Cleveland, Ohio, and will continue to do so. I am very well connected in my city, very well known, and am THE guy in Cleveland for "anything franchise .I own a few websites (Statefranchisecenters.com) and a couple of increasingly popular blogs.
This leads me to the topic of discussion which I just started Part 1 on my blog: Is the Franchise Consulting-Brokering market too damn crowded?
I realize that a can of worms has just been opened, but my personality dictates that this must be discussed. When my Dad started in Frannet, there were really no competitors. Fast forward 16 years later, and everybody and their cousin is a so called franchise consultant. I am sure some "consultants" who have entered the market in the past 5 years are pretty good, and maybe even great! But for the most part, the "consultants" entering the market lately are the ones from franchise companies like The Entrepreneurs Source. They used to be somewhat of a competitor in my market area, but 2 of the franchisees have left in the last year. This wonderful franchise company sells franchises to people to sell franchises.
What I mean is they themselves are a franchisor. "For a $75k-$100k "investment", you too can learn to be a highly paid, home based franchise consultant." (That is my little marketing spin, they have their own). So Terry Powell, the CEO, sells these franchise opportunities to former managers and execs from corp. America (most, who have never owned their own business, or have been even close to a franchise, other than eating some McD's hamburgers. That is not a slam on the franchisees. Our business is about helping others find the right fit.
Ladies and Gentlemen, Start your engines! Thought. Opinions. Gut wrenching honesty. Whatever. I hope to help out 2 groups of people in this discussion:
- Future Franchise Consultants who think they will make tons of money, and that this is "easy".
- Future Franchise Owners of one of 3,500 different concepts, who may work with one of us.
Buyers Market
Franpro,
It sounds like the word on the street is it is a heck of a franchise buyer's market right now. In the housing market, this nowadays translates into a buyer being able to chisel down a consultant's agency fees to get the price of the home cheaper.
Is anyone doing this? Reducing the franchise fee from a reduced consultant commission?
The franchise consultant corner just let out a collective gasp. Whooooohhh.... Did someone just say this in public???? Oh no!
Is Frannet converting to a franchise model?
There is a rumor. Can you confirm that Frannet is converting to a franchise model?
Franchise Brokers
As a franchisor I will not deal with brokers. I would have to raise my fees $30K just to compete with my competition that pays $20-$30K to the broker. I believe it's a house of cards that is already starting to fall. Just look at the number of franchisee suing the franchisors! Brokers are not looking out for the best interest of the franchisee. Most brokers are simply chasing the biggest pay check.
Franchisors are upping the pay outs to levels never seen before. At the end of the day it's the franchisee that has to pay all the bills. I am hearing from our vendors that they are getting hit with BK's from franchisees every week.
I feel sorry for the franchisee who bought into a dream only to fail. Families are ripped apart and many tears run down the cheeks of failed franchisee. Dreams are destroyed by greedy franchisors and brokers who play the numbers game and ignore the failures. How sad!
I have only met a few brokers who are qualified to sell a business. Most were failures in business or from the corporate world. The broker groups are pushing the cost of a franchise up past the common sense level. Unsuspecting potential franchisees are feed a load of used surfboard wax. They are made to believe that this is how much it cost to start a business. This simply not true!
I will continue to sell our franchises at a low cost, and partner with our franchisees to succeed. We have over 400 dealers and NEVER once have we been sued by a franchisee. Only one person has anyone asked for their money back. Yes, we gave a 100% refund. We don’t do it like everyone else, but I can sleep at night.
God Bless
Steve Dale
Blind Brokers Network
Blind Brokers Network.
Thank you for all your interesting comments. We were a biz op since 1992, in 2005 Our competition complained to the DOC in Calif. The DOC spent 3 months investigating us and found a few problems. They said we were acting as a franchise due to the fact that they could find on the internet dozens of people who said they were members of our group. We were a registered Biz Op since 1992 and did so each and every year. After a conversation with the DOC guy who led the group who did the financial audit on us he told me “We could find nothing wrong, but it’s my job to make it more fair and equitable between you and your competition, so it would be best that you just franchise” “We feel it’s in best interest of the public that you charge more.” So at that time the DOC issues it order and then sent it to all registration states and the FTC. The FTC investigated and found that we were not violating any laws. The FTC told us that they are trying to fix the discrepancy between biz ops and franchises and should have it done by 2010 (They only started in 1998)
After contacting all 3 of our lawyers we all decided it was best to franchise. So the title of my book will be “The Reluctant Franchisor”
In all this I came to know many government people whom I actually liked. It was refreshing. My job now is to become the best franchisor in the world. We are expanding into many new products and our franchisee sales are up 30% in just the last 4 months. It was a great experience and I know I’m a better businesses owner for have gone thru all this.
Now one note: I’m sure many of you will read about what the state auditor said to me and blow the fin right off your long board, I know I did and so did our legal team. The legal team was so outraged they didn’t even bill me for much of the work. However I decided to take the high road and later glad I did.
God Bless
Steve Dale
Blind Brokers Network
to crowded diffently
I am a franchise broker consultant for eight months former business owner not franchise running my own start up would be enough exp. for me to advise clients was I wrong franchise consultants should be former franchise owners its totally diffent game than starting your own business which with the same concepts could be done for alot less. my lic. is for sale. which is the only way to try to get my investment back
Time to turn off the Religion Channel, Please...
How the topic I brought forth {or HATH brought forth..sorry, I couldn't resist}ended up with Bible quotes, I just don't know.
As Mr. Frankman suggested, let us shift this discussion to:
"How can you tell a good Franchise Consultant/Broker from the Not so Good ones?"
I get to start.
I strongly believe that choosing to work with a franchise consultant/broker that is locally based is a great start. That is my business model, and I am sticking with it. I could market my services to anyone, anywhere, because of this thing we call the Internet. But I don't. It is beyond me how a potential franchise owner would be comfortable working with a franchise consultant/broker who finds him or her because of an online inquiry on some general franchise advertising website like Bison or something {Sorry, no link Mr. Franchoice..er Mr. Bison}, who works by phone, and who lives 1800 miles away.Cmon..someone convince me that is a great model. Not.
Choosing to work with a locally based small business owner {the franchise consultant/broker} who actually has skin in the game by way of:
1. Leases an office space in the city where the potential franchise owner lives
2. Knows the market..it's conditions, and what works, and of course what doesn't.
3. Has local strategic partners in Banking, Law, and Accounting, which can help the franchise candidate.
4. Can provide somewhat of a jump-start to their new business by way of..well, that is my little proprietary secret..but suffice to say, I help a lot!
5. Is locally networked with other local organizations such as Chambers of Commerce, Colleges, and local industry
Let the discussion begin!
If it walks like a duck...
The first issue I have is the term "franchise consultant", we are brokers. We sell franchise, we get paid by the franchisor, we are FRANCHISE BROKERS!
Wikipedia defines business (franchise) brokers well: A business broker is a person or firm that acts as an intermediary between sellers and buyers of businesses.
The "franchise consultant" gets paid by the franchisor for making the sale, they are brokers!
If it walks like a duck, talks like a duck, and looks like a duck: it's a duck!
I do act as a franchise consultant, that is when I am paid by the franchisor to provide franchise development consulting services directly to them.
The second issue I have is the issue that Joel is referring to, there is are so many "franchise consultant" groups out there now it resembles the meal preparation category.
They are all sell the same line: "why buy a franchise when you make so much money selling them".
Here are some of the benefits one of the "franchise consultant" groups use to solicit for brokers:
If you were considering buying a franchise and investing $150,000 or more would you want to buy from someone who answered the ad above?
The reality is investing in a franchise is a huge decision for anyone to make. I believe for most people it's the single most important decision they will make in their income earning life.
My greatest advice to prospective franchisees is to investigate a number of opportunities and talk to as many knowledgable people as you can prior to making a final decision, there are franchise brokers out there that can offer great insight, my suggestion is that you try to work with a broker that you can meet face to face.
If you live in the Boston area call me: 617-469-3002 if you live in Cleveland/Akron call Joel: 216-831-2610
Jim Coen
Email: Jim@franchiseperfection.com
Blog: Lets Talk Franchising
Brokering Too Crowded?
Hi All, interesting thread. As a successful broker I have to say that this market is underserved if anything. The changing dynamics in today's global economy are pushing more people toward self employment than ever before. These people and the sellers of the business opportunities, benefit greatly from a competent facilitator that can help them find each other. An effective broker will help both parties have a productive discovery process which will ultimately lead to good decisions on both sides.
Finding the right business vehicle is a complicated matter and most people are overconfident in their abilities to choose successfully, so they can avoid financial ruin with the help of a good broker. With millions of candidates looking at thousands of opportunities, there simply are not enough competent brokers to go around.
Having said all of this, I am painfully aware of the hacks and dilatants out there, but clearly that doesn't preclude this from being a good business to enter. If it that were the case no one would go to law school anymore. However, by and large I am proud of my franchise broker colleagues and know many highly competent professionals in this space (I actually train new brokers and provide business tune ups for brokers who want to go to the next level, so I have a frame of reference). Anyway, the bottom line is if you are good at what you do, you will do well and you won't need to chase business, it will come to you. Furthermore, this like anything else is a business that works best if you stay on the high road. Integrity counts! Dan
411 on "Franchise Business Review"
Caught another PR today from a franchisor who claimed a high satisfaction rating from the "Franchise Business Review" Does anyone have the 411 on this company?
How are they buttering their bread?
A brief glance shows that the reports are "free" (after registration) and the scores/feedback on every franchisor that I clicked on is extremely positive...
Is this a creative broker/consultant web site or as claimed on their web site - "Franchise Business Review is the most respected source of independent franchise information."
Apologies if this is a previous topic but I'm still trying to get comfortable with BMM's search engine.
Mr. Frankman
I am hearing$$ or feeling$$ none of this, Bob.
I am just suggesting that there are too many consultant-brokers out here right now, and there will be a shakeout, like in any crowded market. It is just too bad that some of these broker groups are selling "franchises" to folks who may not know how long it takes to get started, not how much marketing money they will have to spend in the first couple of years.
Franpro
Frannet becoming a franchise?
My answers:
1. I see nothing. I hear nothing. I know nothhhhhing....
2. Call Frannet, and ask them
Cheers,
Franpro
How Refreshing
You are indeed a rarity and I'm sure your give-n-take attitude is a big reason you and your franchisees have found success. May you be an example for others.
Lisha
Rhino Super Center
Blind Brokers Network ---Rescision In Maryland?
What happened in Maryland? When I Googled, this matter came up.
Sleeping at night with Blinds
Hi Steve,
Thank you for chiming in. In looking at your website, it looks like what you are selling is a "business opportunitiy", not a franchise. Also, in your posting, you used the word, "dealers". That is OK. Most brokers stay away from "biz opps".
Your feeling towards brokers probably has more to do with you losing deals to Window Fashion franchise opportunities than anything else. However, your opinion is noted, and even appreciated. Most franchisors do not use folks like us. The ones that do work with us know that in every group there are bad apples. That is part of business, and life. I sleep very well at night knowing that I did not push anyone into any type of franchise that was not affordable to my candidates, nor that wasn't the right fit. Sure, some will fail. But most won't. That is what the American Dream is all about.
Sleeping at night with the Maryland AG
Steve,
If you are going to post on this blog forum, please realize that some of us were not born yesterday. It seems that when one does Google Blind Broker's Network along with the word "Maryland", there is indeed some troubling information.
Looks like someone from Blind Broker's Network sold Biz Opps to some "unsuspecting" folks with no written agreements.
Best of luck with your "franchise."
Franpro
Say it ain't so Steve.....
Was I so desperate to believe that SOMEONE.......Hell, ANYONE, on the franchisor side, actually believed AND walked the High Road?
Yet another disappointment............when will I learn?!? (kicking self)
Lisha
Rhino Super Center
Thanks for expanding on the issue
I'm now able to stop kicking myself for daring to believe and continue holding out a tiny piece of hope that ethics and honor can actually flourish if only just a few companies would plant the seed and take the lead.
Lisha
Rhino Super Center
Its called a local business broker
not a franchise consultant
Quick Jim, Duckkkkkk!
Jim,
Nice comment! Only $19,900. How about the group that offers its wonderful "opportunity"for a measely $50,000 Franchise Fee? Or about about the group that i just left that is about to officially offer the same basic opportunity for a $30,000 Franchise Fee.
These remind me of those ads we all see that promise $20,000 a month from Real Estate transactions.
There seems to be a new franchise brokerage group appearing on the scene every other day, or so. Competition has always made me better. This, however, is crazy, because you and I both know that almost all of the new ones won't make it. Now is a pretty poor time to enter the market, anyway. the job market is still pretty good, which makes it harder for us to find prospective candidates.
Face to face meetings are the key, as you stated. The local consultant/brokers know their markets, and may I add one more really important thing? We care.
Email: franpro@sbcglobal.net {franpro at sbcglobal dot net}
Blog: The Franchise King Blog {Subscribe for my musings..BlueMM did!}
Operating in the dark
Maybe you should consider starting your own franchise broker network.
You wouldn't even have to change your company name!
Blind Brokers Network! (most of the franchise brokers operate in the dark anyway)
How much is your franchise brokerage?
I am curious to know the price?
franchise brokering, hello to crowded definitely
hello, sounds as if u want to get out of fran brokering. Well before I jump in a blow my money and time fill me in a little. Is it a real opportunity if one tries to do it right? If it takes 3 years to get a real feel for the bus. maybe it's ok. Are these people really selling internet leads? Anyone with experience in the fran. broker field or has a good friend please jump in. Looking to find out about the business.
In discussion to buy into a fran consult. opportunity.
Very happy to find this blog. I'm in CT and about to drop a few bucks to buy into a fran auth opportunity. Currently operate a 2 person real estate appraisal bus. Need to find new business due to the current busuness/mortgage climate. Please fill me in on the reality of this business. Would like to ask a number of questions about business. Can't aford to waste time and money.
Just Build a Better Mouse Trap
Build a better mouse trap and watch the people beat down your door, eh?
But does the high road lead away from brokering?
Remember, "If you give it a 110%, you are sure to succeed." ;-)
How Do You Determine A Good Broker?
Franpro,
Here's a possible topic for your next blog.
How does one gather the good from the bad?
Is there any sort of certification process for brokers? My buying agent for the house has to go through a tough certification process on laws and how to use his HP 12C financial calculator.
Or is the current state of affairs such that franchise buyers have no choice but to trust the forked-tongue of anyone claiming they can match them with the right franchise?
Oops
Not to mention California. One of the perils of the internet is that sometimes the skeletons in your closet, particulary desist and refrain orders and consent orders from two different state regulatory agencies for essentially the same reason, are readily available for anyone capable of conducting a google search.
SO? - Blind Brokers
Just to chime in - I have not worked with Steve Dale and/or Blind Brokers. They are not a FranSynergy client, however --- Steve has inquired about our program for his franchisees. As a result - I did have a chance to research his opportunity and to speak with him. I did review both his program and the 'situation' in Maryland.
My findings - I found Steve to be an honest and credible business person - who delivers GREAT programs and support to his franchisees. I found that he did struggle (as many do) with transitioning from a licensee to franchisee model. Based on memory, it seems as though the issue in Maryland was in large part a result of and a contributing factor to that transition.
I would not hold the situation in Maryland against Steve and his company, or use it to discredit his earlier statements. Disregarding any past mistakes which may or may not have been made, I believe that Steve Dale tries to do the right things for his franchisees, and is only NOW a Franchisor BECAUSE legally his business model is defined as such.
STEVE: It's nice to see you here on BMM - your contributions as an extremely FAIR franchisor and honest christian business person provide an insightful perspective for us all.
Believe & Succeed,
Dale
FranSynergy, Inc.
Synergizing Franchising!
www.fransynergy.com
ethics will flourish
Ethics and honor will flourish when it benefits the franchisor to have ethics and honor.
It is true that "benefit" may be in the form of self-worth or community reputation, but a much quicker way is to appeal to pecuniary interest.
When franchisees put a premium on ethics and honor, franchisors will rush to become more ethical and honest. But franchisees put a premium on glossy literature and sweet whispers of riches, and they reward style more than substance.
Reality of franchise brokerage/consulting
Hi Guest,
If you go to my blog, I have a multi-part series that may help you get some answers to your question.
Just go to:
The Franchise King Blog. .
Franpro
Why do you think TFA is a good business to invest in?
What research have you done? What has TFA presented to you thus far?