Not just another Lead Referral Network!
Many people confuse Franchise Sales Outsource companies with Broker networks, but in fact, they are two different types of organizations entirely.
Franchise brokers are, in a legal sense, often referred to as Lead Referral Networks (LRNs). (For the sake of clarity, we refer to broker networks as a whole as LRNs and the individuals within those networks as brokers.)
The primary role of LRNs is to provide pre-qualified leads to participating franchisors in return for a success fee.
|
Responsibilities |
LRNs/Brokers |
FSOs |
|
Primary function |
Provide Qualified Leads |
Take lead through the sales process until a sale is closed |
|
Number of Concepts Represented |
60 – 200 or more |
Generally under 20 |
|
Number of concepts an individual broker or salesperson would actively promote |
60 – 200 or more |
1 – 4 |
|
Exclusivity |
Generally non-exclusive. Often, franchisors will have relationships with multiple LRNs. |
Generally exclusive. |
|
Reporting obligations |
None |
Monthly |
|
Contractual obligations |
None |
Negotiated levels of annual franchise sales activity specified in contract |
|
Required marketing |
None, although they may ask franchisors to attend/sponsor annual conventions |
Negotiated levels of marketing expenditure on the part of the franchisor included in most contracts |
|
Fees |
Success fees only, with averages ranging between $15,000 and $30,000. Some LRNs will try to take a percentage of the royalty as well (we strongly recommend against this). |
Most FSOs will try to take a fee for each franchise sold plus percentage of the royalty.
Franchise Dynamics in unique in that it does not take any of our client's royalty . |
|
Responsible for data entry |
Franchisor |
FSO |
|
Responsible for sending material |
Franchisor/Broker |
FSO |
|
Responsible for pre-qualification |
Broker |
FSO |
|
Responsible for follow-up |
Franchisor |
FSO |
|
Responsible for Discovery Day |
Franchisor |
FSO |
|
Responsible for UFOC Disclosure |
Franchisor |
FSO |
|
Responsible for document management |
Franchisor |
FSO |
|
Responsible for final qualification and the actual decision on the award of a franchise |
Franchisor |
Franchisor |
