FSOs vs Brokers
It’s Not Another Lead Referral Network
Many people confuse Franchise Sales Outsource (FSO) 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 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.
The primary role of FSOs is to become the franchise sales arm of your franchisor entity.
A comparative chart:
| Core Activity | Broker Firm | FSO Firm |
| Primary Function | Provide qualified leads | Take leads through the sales process until a sale is closed |
| Number of Concepts Represented | 20 – 200 or more | Generally, under 20 depending on the size of the firm |
| Number of Concepts an Individual Broker or Salesperson Would Actively Promote | 25 to 200 | 1 to 4 |
| Reporting Obligations | None | Monthly |
| Contractual Obligations | None | Negotiated levels of annual franchise sales specified in the contract |
| Required Marketing | None, although they may ask | Negotiated levels of marketing expenditure by the franchisor included in most contracts |
| Fees | Success Fees only, range of 25%-50% | Monthly Retainer plus Success Fee |
| Responsible For Sending Initial Materials | Broker | FSO |
| Responsible For Pre-Qualification | Broker | FSO |
| Responsible For CRM Data Entry | Franchisor | FSO |
| Responsible For Follow-Up | Franchisor | FSO |
| Responsible For Discovery Day | Franchisor | FSO |
| Responsible For Legal Disclosure (FDD) | Franchisor | FSO |
| Responsible for Document Management | Franchisor | FSO |
| Responsible for the Final Qualification and the Actual Decision on the Award of a Franchise | Franchisor | Franchisor |
When considering a Franchise Sales Outsource company, here are examples of important criteria they should meet:
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Provides full-cycle services
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Staff with substantial franchise sales/development experience
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Commitment to your development goals
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Our model offers substantially less risk and significantly improved chances of return at a cost that is similar to what a franchiser would pay for alternatives.
Click here to view on the next Blue Seas FSO Service: Quality Control
Time is Money. Ready To Franchise Now?
Phone: +65 9144 1412
Email: scott@blueseasfranchiseconsulting.com
Address: 1 Tampines North Drive 1, #06-08 T-SPACE, Singapore 528559