The Problem With Portals and Brokers and What I Did About It

When it comes to Franchising, there are only a handful of methods a Director of Franchise Development has at their disposal to develop candidates who may be interested in investing in their opportunity. These options range in cost as low as a few dollars to big chunks of the franchise fee; in some cases 50% of the franchise fee is common. One might find it interesting to know that you don’t always get what you pay for in these circumstances either.

As the Director of Franchise Development for a family of 6 international brands with over 1500 locations in 70+ countries, I have learned a lot of lessons over time about what makes a great prospect, where you can find those prospects, and how to engage them into the franchise sales process.

The first lesson I learned was the vast difference between Franchise Portals and Franchise Brokers as well as what options exist in the middle.

For the last 10 years or so, the Franchise Portal has enjoyed a relatively large corner of the market and they have produced many viable franchise candidates through the years. At an average cost of around $34 per lead, one would think that the cost per deal would be relatively low for these lead sources.

My experience has been quite different.

First, let me better explain how Franchise Portals work.

A franchise portal is a website that is populated by hundreds of franchise opportunities, organized as a directory, which is searchable by any number of filters, Industry and Investment level and universal filters among all portals. Each of these franchise pages houses a form aimed at gathering the contact information of a potential business owner who is interested in that specific concept. Upon submission, the franchisor is passed these details and, in some fashion, charged a fee for that information. Generally, these fees range from $20-$40 each.

Sounds pretty simple right?

When these portals first started to appear, their lead quality was actually quite good. The people who were internet savvy enough to seek business opportunities from an entity like a franchise portal were a higher caliber of investor who understood technology and had the means and the education to seek business opportunities and franchises online.

Over time, as the internet and technology became more accessible to the masses, the franchise portals were more widely exposed as well. This brought a tidal wave of tire kickers to the table and raised the blood pressure of every Franchise Development Director in the business.

What was once an inexpensive, high quality, lead generation tool, has now become a cumbersome, oversaturated time waster filled with unqualified tire kickers that have big dreams and have no real ability to buy a franchise.

At present, Franchisors have to buy a very high volume of portal leads to find the right candidate who actually winds up purchasing a franchise. This drives up the cost per deal, not only in acquisition costs, but also in resources spent weeding through all of the tire kickers.

In direct contrast to the franchise portals are Franchise Brokers or Franchise Consultants.

A Franchise Broker is someone who does the selling for the franchisor along with finding, qualifying, and developing the candidates to sell the brand to in the first place. For this service, the broker charges a percentage of the franchise fee or a flat, previously agreed upon commission. Depending on the brand, brokers can take upwards of 50% of the franchise fee in some cases. This makes them an expensive proposition for many franchisors.

Another issue that comes with using brokers is their lack of brand knowledge. Since they are independent, brokers tend to lack the intimate knowledge of the brands they are presenting as well as the enthusiasm that can only come from sales people who are directly involved with the particular franchise.

Do brokers close deals? Yes they do. Are brokers expensive? Yes they are.

Ultimately, they should be part of the overall marketing mix and franchise development directors should seek to develop relationships with a few brokers and help them become champions of their brand in order for them to be more effective at bringing viable, enthusiastic prospects to the closing table.

What other options exist besides brokers and portals?

While every Franchise Development department has internal methods of producing qualified inquiries through methods like pay-per-click and discovery pages, many are not aware of a new phenomenon known as Prospect Development Firms.

Prospect Development Firms exist in the space between portals and brokers and have quickly gained a foot hold in the franchising world as the ideal method of generating qualified candidates at price point that keeps the cost per deal in the ideal range that allows franchisors to maximize the return on their advertising dollars.

A Prospect Development Firm does exactly what their title describes; they develop viable prospects for franchisors. This differs from franchise portals in many ways, the most dynamic of which are that the Prospect Development Firm verifies all of the candidates information, probes their history and interests and, once equipped with this information, matches the candidate with ideal brands that fit not only their background and expertise, but their investment level as well. Prospect development firms go even further by exposing the candidate to the actual franchise opportunity instead of sending over a candidate with simply the industry vertical as a point of reference.

The advantage of working with a Prospect Development firm is that you get a very well qualified franchise candidate who is enthusiastically seeking more information on the specific brand without having to cough up a large commission.

These firms charge between $50 and $100 for these candidates which results in a considerably lower cost per deal than other, more well-known lead generation methods.

Another advantage of working with Prospect Development Firms is that they become intimately familiar with your brand and work in partnership with your program to develop a steady flow of candidates that are not only matches for your ideal candidates, but can also be geo-targeted to specific markets, often for no further cost.

Ultimately, my job as the Director of Franchise Development was made easier by Prospect Development Firms like FranchiseMart and their Executive Director Alex Titus, who has invested the time to understand what my ideal prospect looks like, what my sales goals are, and has never failed to produce some of the best candidates in the industry.

I would recommend investigating Prospect Development Firms like FranchiseMart further, and I would encourage you to include them in your franchise sales efforts.


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