How to Avoid a Bad Franchise Consultant

One of the biggest investments you’ll make as a franchisee (after the franchise fee and equipment) is in an experienced, polished, and driven business consultant. It’s never too early to start talking with people about your plans. If you’re not sure where to begin, I suggest you ask some of your trusted contacts for referrals on who they have used in the past. Most people will be happy to share their experience, both good and bad. Keep a list of candidates and check back with them at regular intervals throughout your research process. When you feel you are ready to move from “plan” into “act,” then it’s time for some interviews.

 

The most important thing to keep in mind when choosing a franchise consultant is that your success in the business starts with them. You want someone who will be patient and available, allowing you to ask lots of questions, no matter how basic. Find out if they are willing to work within your time constraints (e.g., evenings, weekends). Also, ask how much they charge for initial consultations. You can get a sense of how involved they will be in your business by the length of their initial telephone conversations with you.

A consultation should not last less than an hour. In most cases, you should expect to pay a retainer fee—an amount that is nonrefundable after the first session and that would cover the consultant’s expenses for his time and research with you. The fee, if any, might be highest at the beginning of the franchise relationship—for example, $500 to $1,000 or more—based on your goals and budget (usually monthly).

 

As you interview candidates who look like they fit your needs and fit within your price range, it’s a good idea to have your list of questions ready to ask. For example:

 

• What is the scope and extent of your involvement going to be in my business?
• How much time will you spend on a weekly or monthly basis with me?
• Are you willing to share a sample contract so I’ll know what to expect?
• What fees, if any, will you charge, and when? Give me some idea of what the charges would be for each stage in the process.
• What is your franchise background? How many years have you been in business consulting compared with your years of franchising experience? What brands have you consulted on in the past?
• Are you a member of the International Franchise Association? How many franchisees do you have on your client roster, and which brands?
• Could we pay for a second opinion from another consultant, if I’m not satisfied with your services? Could we terminate our agreement after one year if things aren’t going well? Can you give me a sample contract?

You’ll want a consultant who is willing to work without a contract. But you may benefit from a written agreement, at least initially. The key thing to look for in any franchise consultant business arrangement is the level of commitment and effort each party will make over time. Ask yourself: If one or both parties do not live up to their end of the agreement, who has the most to lose? If you have a contract and it is broken or violated by either party, what is your remedy in a court of law?

Conclusion

It’s important to find out whether you can trust your consultant. Franchise consultants deal with sensitive information that could be used, intentionally or unintentionally, against you. Ask questions to establish the profile of the consultant’s clientele. Your management team or advisors should be able to refer you to other franchisees who have used this person; those references will give you a good indication as to whether your consultant is working in your best interests. Some consultants will put their agreement with you in writing and sign it. If that is your preference, make sure you understand exactly what they will do for the fee and when they will be doing it.

 

Choosing a franchise consultant is a lot like choosing a partner in business. It’s about chemistry and compatibility—and knowing whether someone has your best interests at heart or not.

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