Earn big commissions selling franchises. Learn what a franchise broker does, how they earn commissions, and how they find clients.
Similar to finding the right home for a buyer, but requiring a perfect “fit”.
California Law Regarding Selling Franchises
Under California law, real estate brokers and their agents can sell franchises.
The California Department of Real Estate (DRE) publishes an online book explaining “Business Opportunities” laws. Page 546 specifically states that persons authorized to sell franchises include, “A person licensed as a real estate broker or a real estate salesperson”.
Federal Law Regarding Selling Franchises
Federal laws require giving every franchise buyer a “Franchise Disclosure Document”, known as the “FDD”.
Therefore, California real estate brokers and agents can sell franchises and collect commissions. Federal laws require giving every franchise buyer an FDD.
Earn Commissions Selling Franchises
One franchise brokerage claims, “There are hundreds of franchises that pay commissions from $10,000 to $65,000”.
The best part is that most of the work occurs on the part of the franchises and not the brokers.
Most franchises prefer limited involvement by the brokers. They only want brokers to educate, qualify, and refer their clients to the franchises who close the deals. Franchise brokers don’t have to review balance sheets, tax returns, P&L, or even package franchises for sale. Similar to the way the SBA describes a broker as a mere “matchmaker”.
Sounds like big commissions for less work than listing and selling a house.
Buying a new franchise is similar to ordering a new car. The buyer picks the type of business, location, etc. With so many franchises to purchase, broker’s custom tailors the type of business the client wants and finds the right franchise.
Just like matchmaking.
Finding the Right Franchise for Your Clients
Sadly, no MLS exists for franchises. However, resources exist for finding franchises available to purchase in your city and state.
Business and Franchise Broker platforms serve to locate available franchises by location and type of business.
For instance, the Biz Ben site provides over 8,000 businesses for sale in California including franchises in numerous business categories like:
- Business services;
- Travel; and
The Top 100 Small Franchises
This site lists their Top 100 small franchises in the U.S. These smaller ones cost much less than the big franchises.
The Cheapest Franchises
Entrepreneur also publishes its The 7 Cheapest Franchises on the Entrepreneur Franchise 500 List.
Dunkin Donuts and 7-11 Franchises
Dunkin’ Donuts franchise because it’s the best coffee franchise. While some think Starbucks is a franchise, it’s not because the company owns every location and only licenses some of their shops to use while ownership remains with the company.
Dunkin’ Donuts ranks as #3 in Entrepreneur’s Franchise 500 list for 2018. With over 9,000 locations in the U.S., it’s the largest coffee franchise. Began franchising in 1955, and hasn’t stopped growing every year since. Owning a Dunkin’ Donuts starts at $40,000 to $90,000 and requires the owner to maintain a $250,000 net worth (at least 50% in cash).
Here’s a map of available locations for new franchises.
7-Eleven ranked as the #2 on the Entrepreneur Franchise 500 list. More than 62,000 7-11 franchises worldwide. That’s more than Dunkin’ Donuts and Starbucks combined.
7-Eleven offers pre-existing locations you can purchase avoiding the construction and startup costs. Of course, the option exists to open one in a new location too.
The costs for a 7-11 franchise starts at $47,000. Of course, depending upon location the cost for buying the real estate can become expensive.
The Best Franchises to Buy
Entrepreneur lists the best franchises to open in 2019. Click on each hyperlink to learn about the total costs. The list includes:
4. UPS Store
6. Great Clips
7. Taco Bell
E-2 Visa for Buying a Franchise
The E-2 Investor Visa allows foreigners to live and work in the U.S. Even allows their family to accompany them. However, the children must be under 21.
Note: Do not confuse this visa with the controversial H-1B Visa allowing 75,000 foreigners every year to work in the U.S. that President Trump vowed to abolish.
In 1952, the Immigration and Nationality Act (INA) created the E-2 Visa so investors from countries having a treaty with the U.S. can enter, live, and work in the U.S. Its purpose is to encourage international investments in the U.S.
In addition, the U.S. Department of State maintains a current list of the treaty countries eligible for an E-2 Visa. Some treaties date back to 1815. See the current list HERE.
Benefits of the E-2 Visa
The easiest visa for investors from treaty countries to move to the U.S. with their immediate family.
This investor visa allows treaty citizens to enter the U.S. along with their immediate family (spouse and children under 21) and invest in a business anywhere in the U.S. The spouse also qualifies for a Work Permit to work for any type of company in the U.S. However, this is not a “Green Card”, but an EAD card (Employment Authorization Document). In addition, the children are not allowed to work in the U.S.
Also, the E-2 business can hire other nationals from the same country to work as “essential employees” like executives, management, and supervisors. They also qualify for the same E-2 Visa sponsored by the business. In addition, the essential employees can bring their immediate family to live here too.
Restrictions of the E-2 Visa
Only businesses operating out of separate real properties whether owned or leased qualify. Home office businesses do not qualify.
The E-2 Visa is not a permanent residency immigration program. E-2 Visa holders are considered as “non-immigrant” residents who can remain in the U.S. indefinitely as long as the business remains viable. If the business closes, the E-2 Visa revokes and the entire family must leave the U.S.
Most E-2 Visa holders and their family receive a two-year visa. But, this visa allows indefinite two-year extensions as long as the business remains open. No limits exist for granting extensions.
However, if the E-2 Visa holder wishes to become a permanent resident or a citizen, the person must apply for and qualify for a different immigration visa.
Types of Business Qualify for E-2 Visa
No restrictions exist about the type (classification) of business the E-2 holder owns.
However, three types of business investments qualify for the E-2 Investor Visa:
1. Open a new franchise business; or
2. Open a new independent business; or
3. Purchase an existing business.
Minimum Investment for E-2 Visa
The law fails to specify any minimum investment to qualify for the E-2 Visa.
However, one Texas immigration law firm claims success with over 93% of their E-2 Visa clients only investing at least $75,000 (cash) in a franchise.
Finding E-2 Visa Clients to Buy Franchises
Thus, a good marketing strategy to find E-2 Visa clients include:
- Team up with a local immigration law firm to process clients’ E-2 Visa applications.
- Look at all of the countries listed on the State Department’s Treaty Countries linked above.
- Advertise in that country promoting the E-2 Visa. For example, Mexico is one of those countries. Advertise in Spanish in Mexican newspapers, websites, forums, etc.
- Use the resources above to locate available franchises and enquire about their franchise broker commissions.
- Qualify the potential buyers and refer them to the best match franchise.
- Collect your commission after the closing.
Resources about Franchises
Some helpful resources include:
Glossary of franchise industry terms.
Franchise Q&A by an immigration law firm.
Franchising for Dummies, co-authored by Dave Thomas the founder of Wendy’s. It’s a concise handbook for understanding franchising available for sale online.
Franchise Education Videos provides step-by-step instructions for franchising a business.
Franchising News gives the latest news about the franchising industry.
Franchise Management for Dummies this book teaches prospective franchisees and franchisors a guide for starting a franchise system.
Making the Franchise Decision Workbook provides an evaluation tool for determining whether a franchise is the right one to invest in.
2019 Franchise Compliance Calendar sets forth compliance rules on a downloadable compliance calendar.
Earn big commissions selling franchises.
Become a franchise broker by:
- Using the resources provided here to learn about the franchise broker industry.
- Team up with a local immigration law firm to process E-2 Visa applications.
- Select a qualifying country to promote the E-2 Visa.
- Advertise in that country publicizing the E-2 Visa.
- Maintain a database of local franchises available to purchase or create new ones.
- Perform matchmaking services with clients seeking specific types of franchises.
- Contact the franchisor about your commissions and refer clients to them.
- Wait for the closing to collect your commissions.
Prior to making tons of money as a franchise broker look at a 100% commission brokerage to keep more of your future commissions.
Steven Rich, MBA – Guest Blogger
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