Franchise Consultant vs. Business Broker
Both professions help people pursue business ownership — but the businesses themselves are quite different. Here's how the two career paths compare.
Similar Skills. Very Different Businesses.
Franchise consultants and business brokers both help people pursue business ownership, and many of the skills required to succeed in each profession overlap. But the businesses themselves are quite different.
A business broker generally helps an owner sell an existing business and works with prospective buyers interested in acquiring it.
A franchise consultant helps prospective business owners explore franchise opportunities, identify concepts that may fit their goals and investment range, and navigate the franchise discovery process.
For professionals considering either career path, understanding those differences is important.
What Does a Franchise Consultant Do?
A franchise consultant — also commonly called a franchise broker or franchise advisor — works with people considering franchise ownership. The process typically begins by learning about the client: their professional background, financial qualifications, goals, interests, desired lifestyle and level of involvement in the business.
From there, the consultant may:
- Identify franchise opportunities that fit the client's criteria
- Introduce the client to appropriate franchisors
- Help the client understand the franchise discovery process
- Prepare the client for conversations with franchisors and franchise owners
- Help them understand and navigate the Franchise Disclosure Document (FDD)
- Serve as a resource as the client evaluates different opportunities
The consultant does not make the decision for the client. Their role is to help the client explore intelligently, ask better questions and determine whether franchise ownership — and a particular franchise — makes sense for them.
What Does a Business Broker Do?
A business broker typically represents the owner of an existing business that is being offered for sale. Their work can include:
- Helping establish an asking price or valuation
- Preparing the business for market
- Advertising the business for sale
- Qualifying prospective buyers
- Protecting confidential business information
- Coordinating buyer and seller communications
- Assisting with offers and negotiations
- Working with attorneys, accountants, lenders and other professionals
- Helping move the transaction toward closing
In many ways, a business broker operates similarly to a real estate broker — except the asset being transferred is an operating business rather than a piece of real estate.
What Are You Actually Selling?
Business Brokers Represent Existing Businesses
A business broker generally has a specific inventory of businesses for sale. Each listing has an owner, asking price, financial history, assets and other characteristics unique to that business.
When that business sells, the listing is gone.
Franchise Consultants Represent Opportunities
A franchise consultant typically works with a portfolio of franchise brands that are actively seeking qualified new franchise owners. Instead of beginning with a particular business that needs to be sold, the process usually begins with the client.
What are they trying to accomplish? How much do they want to invest? What type of business fits their skills? How involved do they want to be? Where do they want to operate?
The consultant then works backward from those answers to identify franchise opportunities worth exploring. That makes franchise consulting much more of a matching and advisory business.
How They Get Paid: Franchise Consultant
In the traditional franchise broker model, the prospective franchise owner generally does not pay the consultant for their services. Instead, participating franchisors pay a referral or placement fee when a candidate introduced by the consultant ultimately invests in the franchise.
The amount varies considerably by franchise and broker organization, but a successful placement can generate a substantial five-figure commission. If the client decides not to invest in a franchise, the consultant generally receives no placement fee.
This success-based compensation model is one of the characteristics that makes franchise consulting unusual among professional consulting businesses.
How They Get Paid: Business Broker
Business brokers are generally compensated when a business transaction closes. Compensation is commonly based on a percentage of the transaction value, a negotiated success fee, or another arrangement established with the seller.
Because business brokers are typically representing a business owner, their compensation usually comes from the seller or proceeds from the transaction.
Do You Need a License?
This is an area where the distinction becomes especially important.
Business Brokers
Business-broker licensing requirements vary by state and by the type of transaction involved. Some states require a real estate license for certain business brokerage activities, particularly when real estate or a lease is part of the transaction. Other states have different requirements. Anyone considering becoming a business broker should investigate the specific laws and licensing requirements in the states where they intend to operate.
Franchise Consultants
There is no single nationwide professional license called a "franchise consultant license." However, franchise sales are regulated, and federal and state franchise laws can apply to the activities of consultants and brokers involved in franchise transactions. Requirements can also vary by state. For that reason, franchise consultants need proper training in franchise regulations, disclosure requirements and the boundaries of their role.
Franchise Consultant vs. Business Broker at a Glance
| Franchise Consultant | Business Broker | |
|---|---|---|
| Primary Client | Prospective franchise owner | Business seller and/or buyer |
| Inventory | Franchise opportunities | Existing businesses for sale |
| Compensation | Typically paid by franchisor | Typically transaction-based |
| Upfront Client Fee | Typically none | Varies by engagement |
| Primary Role | Matching and guidance | Marketing and transaction facilitation |
| Work Location | Commonly home-based/remote | Often local or regional |
| Geographic Reach | Can often work nationally* | Frequently market-specific |
| Overhead | Generally low | Generally low to moderate |
| Licensing | Depends on activities and jurisdiction | Varies significantly by state |
| Success Driver | Client development and successful franchise placements | Listings, buyers and closed transactions |
*State franchise laws and registration requirements may affect where and how franchise opportunities can be offered.
Which Business Is Easier to Start?
Both businesses can have relatively low overhead compared with opening a traditional brick-and-mortar business, but the startup models are different.
A business broker must develop both sides of the marketplace: business owners willing to list their companies and qualified buyers interested in acquiring them. Building a strong inventory of quality listings can take time.
A franchise consultant who joins an established franchise consulting organization may begin with access to an existing portfolio of franchise brands, training, technology, systems and industry relationships.
That doesn't eliminate the need to build a business. Successful franchise consultants still need to market themselves, develop relationships, generate prospective clients and build a professional reputation. But they don't necessarily have to build the franchise inventory side of the business from scratch.
Can You Work From Home?
Franchise consulting is particularly well suited to a remote business model. Most client meetings can be conducted by phone or video, franchise research can be performed online, and franchisor introductions and discovery processes are increasingly conducted remotely. That allows many franchise consultants to work with clients across multiple markets without maintaining a traditional office.
Business brokerage can also be operated with relatively little physical overhead, although the business tends to have a stronger local component. Brokers may need to visit businesses, meet sellers, understand local market conditions and participate in transaction-related meetings.
For someone specifically looking for a location-independent professional business, franchise consulting can offer considerable flexibility.
Can You Do Both?
Absolutely. The skill sets complement each other extremely well.
Someone with experience in business brokerage already understands many of the fundamentals required in franchise consulting: client qualification, financial conversations, business ownership, relationship management and helping people navigate major financial decisions.
Likewise, franchise consultants frequently encounter people who decide that a resale or existing business may be a better fit than starting a new franchise location. Some professionals therefore choose to offer both services. The important distinction is understanding the different responsibilities, compensation structures and regulatory requirements involved with each type of transaction.
Which Career Is Right for You?
Neither business is inherently better. They appeal to different strengths and business goals.
Business brokerage may be a better fit if you enjoy:
Working with financial statements and valuations, developing local relationships, acquiring listings, negotiating transactions and working through the details of buying and selling established businesses.
Franchise consulting may be a better fit if you enjoy:
Consultative conversations, understanding people's goals, researching different business models, matching people with opportunities and building a flexible practice that can serve clients across a broader geographic area.
For many professionals, the appeal of franchise consulting comes down to a relatively simple combination: Low overhead. Flexible location. Significant commission potential. And the opportunity to help people make one of the biggest business decisions of their lives.
Interested in Becoming a Franchise Consultant?
There are several ways to enter the franchise consulting industry, from independent business opportunities and broker organizations to franchise-based consulting models. The costs, training, technology, support and business structure can vary considerably from one organization to another.
Before choosing one, understand exactly what you're getting — and compare your options.
Explore Franchise Consultant Opportunities