Buying & due diligence

Franchise broker

A franchise broker (or franchise consultant) is an intermediary who helps match prospective buyers with franchise systems, usually paid a commission or referral fee by the franchisor when a sale completes — which is why their recommendations should be treated as leads to investigate, not independent advice.

What it means

Franchise brokers present buyers with a shortlist of systems, make introductions and help move the process along. Some genuinely narrow the field for a busy prospect. The key thing to understand is how they are paid: most brokers earn a commission from the franchisor when you sign, so they are incentivised toward the brands that pay them, not necessarily toward the best fit for you.

This is not the same as the independent legal, accounting and business advice the Franchising Code encourages you to obtain before signing. A broker's suggestions can be a useful starting point, but the buyer still needs to run their own due diligence: read the disclosure document, validate with current franchisees, and have the agreement reviewed by professionals who act for the buyer, not the seller.

Because a broker's role touches the sale, any material payments or benefits between franchisor and third parties associated with the arrangement are the sort of thing buyers should be alert to. Ask the broker directly whether, and how, they are paid, and treat the answer as context for weighing their recommendations.

In practice

Use a broker for introductions and shortlisting if it helps, but always ask who pays them and how much. Then do the same due diligence you would do without a broker — disclosure document, franchisee validation, independent legal and accounting review.

Be wary of pressure to move quickly or to consider only the systems a broker represents. The consideration and cooling-off periods exist to protect you; a broker's commission timeline is not your deadline. Widen the search beyond the broker's list before deciding.

A real example

A prospective buyer meets a franchise broker who presents four systems. The buyer likes one, but asks how the broker is paid and learns the franchisor pays a commission on signing. Treating the introduction as a lead rather than advice, the buyer independently reviews the disclosure document, calls six current franchisees, and has a franchise lawyer check the agreement before proceeding.

Franchise broker — FAQs

Is a franchise broker independent?

Usually not. Most brokers are paid a commission by the franchisor when you sign, so their recommendations favour the brands that pay them. Treat their suggestions as leads to investigate, not impartial advice.

Do I pay the broker?

Typically the franchisor pays the broker, not you. But because that shapes their incentives, always ask who pays them and how much before relying on their shortlist.

Can a broker replace my own due diligence?

No. You still need to read the disclosure document, validate with current franchisees, and get independent legal and accounting advice from professionals acting for you.

Should I use a franchise broker at all?

They can save time on introductions and shortlisting, which suits some buyers. Just widen the search beyond their list and keep control of your own due diligence and timeline.

See the full franchise glossary, the Fee Index or our buyer guides.