The evolution of franchising consulting has been enormous recently. Everything must change but the question is whether or not if the change is good. Fortunately for you, I’ve put together a quick article about this industry and how the recent changes have been great!

Franchise companies, otherwise known as franchisors, typically sell their franchises in 2 ways. They either sell the franchises themselves which has its own set of challenges and obstacles or they can hire a brokerage firm to sell the franchises for them and pay a commission fee to the franchise broker. This model has worked great for many years but it’s limited in its structure.

You see, franchising consulting works pretty well on a very basic level. You find prospective franchise owners, you sell to them and you get paid when they buy a franchise. It’s a one-time deal that has zero leverage and no real scalability especially if you are the type of entrepreneur that thinks big.

Fast forward to today and there’s been a huge revelation in this industry. The new model in the franchising consulting world is based on the insurance industry, which is an “agency” model. This means that consultants get “rewarded” for being an entrepreneur by being a leader and developing and managing a sales team.

As a reward for being a leader, the franchise consultant will get “overrides” or bonuses depending on their level of leadership or what branch or division they oversee.

What’s the overall effect? Leverage. There is a huge component of leverage that now takes place and truly rewards the franchise consultants who can rise to the top. This type of business model is definitely attracting top entrepreneurs who understand business and understand the power of true leverage. If you look at the rich, they have their money work for them (leverage) instead of them working for their money.

In the franchising consulting world, this type of model has NEVER been done before. It has literally revolutionized the way franchises will be sold forever. Any smart business owner knows that having leverage in your business is an absolute must. What I predict will happen is franchisors will see the power of this model and see the benefits of having XFM reps market their franchises.

If you’re on the lookout for good Franchising to take a pick from, you can begin scanning the Internet where you’ll find a lot of websites with a lot of offers to explore. But you have to be careful though because not all things you’ll find online will actually be the way they are in real life. You can’t just buy a franchise after viewing some webpage or talking to business owner once. You have to do some investigations in order to increase your chances of success as you look for the best franchise to buy. Seek professional advice. This is one of the best recommendations you can heed. But most of all, know the pitfalls of buying a franchise so you’ll avoid ending up with the wrong one.

The first thing you’d like to avoid is to be swayed by an offer for you buy a business that you’re not even genuinely interested in. For example, an automobile dealer may convince you that his business is doing great and that you can make an even better job running it yourself. But do you even like cars? You do ride cars and you need them, but do you have the slightest about what lies underneath a hood that makes your own car run? You don’t have to be a master mechanic to buy an automobile dealership but at least, you have to be interested in what you’re selling because that’s what’s going to make your business interesting to you. And when it’s interesting to you, running it will be the easiest job in the world. Still, you can’t be inflexible. Yes, you need to be interested in the nature of the franchise you’re planning to buy but your interests don’t always have to be the ones you’ve known a long time. You can always explore within you and explore different franchises that may just work for you.

The second pitfall you’d like to stay away from is not conducting a background check on whatever franchise you’re looking to buy. Of course, this is important because you can’t just trust anybody’s word without ascertaining what level of credibility they have in the business community. You should research on this company’s history, the people who have been in and out of it, their other business activities and the like. Most importantly, you need to know just where the business stands, financially speaking. You can’t expect a current owner to show you everything, though. He may show you his books but remember that these will be income tax returns and other documents which were probably intended to minimize taxes. That means you can’t really expect to see how much profit this business is making just by looking at its financial records. For this, you can only rely on practical information such as popularity and, of course, how the business fares in relation to other businesses within its league.

The third mistake you can make is not establishing rapport with the current owner. This may sound odd but getting friendly with the owner has its benefits. It makes transactions easy to deal with and faster to complete. Getting comfortable around the owner also allows you to ask all the questions you want to ask such as what they think of their profits or how they think their business will perform in the near future given current market trends. Building rapport with the owner is something you don’t want to skip because this will give you the power to probe into the real financial standing of the business in the most natural way – a very good strategy to getting the most natural and honest questions, too.

Fourth, don’t buy a franchise without seeking professional advice. You may be the best person to buy the next Wendy’s franchise, but if you’re not in the business of franchise-selling, you’re always better off finding someone who is. You need to have someone who has the right machinery to find the right business owners you can buy a franchise from. Besides, these professionals do it all in a day’s work. In short, they’re indispensable.