What franchise consultants do not tell you about their commissions

The truth about the free service

When you start looking into franchise ownership, you will quickly find consultants who offer to guide you through the process for free. You do not pay them a dime. It sounds like the perfect deal, but you need to understand how the economics of this industry actually work. These consultants are essentially recruiters. When you sign a franchise agreement, the franchisor pays them a placement fee. This fee is often significant—sometimes ranging from $15,000 to $30,000 or more per deal.

How commissions shape recommendations

Because these consultants are paid by the franchisor, they have a natural incentive to prioritize brands that pay the highest commissions. Some franchisors offer higher referral fees to attract more candidates, while others may offer bonuses for hitting certain volume targets. A consultant is a business owner, too. If they have two franchise options that seem like a good fit for you, but one pays a $25,000 commission and the other pays $10,000, there is a very real, human temptation to steer you toward the higher-paying option.

This does not mean the consultant is trying to hurt you. It just means their business model creates a potential conflict of interest. They might honestly believe the brand they are pushing is a good fit, but their subconscious is likely influenced by the size of the check they will receive at the end of the process.

Ask these questions to force honesty

You can protect yourself by stripping away the secrecy surrounding these payments. Before you let a consultant build your search criteria, ask them these specific questions. Their reaction will tell you everything you need to know about their transparency.

• Do you get paid different commission rates by the various brands you represent?
• Are you incentivized to meet specific volume targets for certain franchisors?
• Will you show me a list of the brands you work with that are outside of your current network?
• If I choose a franchise that you do not have a contract with, will you still help me evaluate it?

If a consultant hesitates or becomes defensive when you ask these, take it as a red flag. A transparent consultant will answer these questions directly. They might even explain that they have a standard fee structure across all their brands to minimize bias. That is exactly the kind of professional you want on your side.

Look for the patterns

Watch how they curate your list of options. If they only present you with three or four brands that all seem to come from the same parent company or the same group of private equity owners, pause. They might be working within a limited pool of brands that they have a strong relationship with—or, more likely, a relationship that pays well. Ask them why these specific brands are on your list. If the reasons are generic or sound like a marketing brochure, they are not doing the deep work to understand your specific financial or personal goals.

Trust your own due diligence

Never rely solely on a consultant’s opinion. Use them as a starting point to generate ideas, but do your own heavy lifting. Call existing franchisees. Ask them about their real costs, their daily struggles, and whether they would sign their agreement again. If the consultant discourages you from talking to certain franchisees, or tries to filter those conversations, walk away. You are the one who will be responsible for the debt and the daily operations, not the consultant. Their job is to facilitate your research, not to curate your reality.

At the end of the day, you are the customer. Even if you are not paying the invoice, you are the one taking the risk. Demand full transparency and do not be afraid to look for brands outside of what your consultant puts in front of you. A professional who has your best interests at heart will support your desire to do your own investigation. If they try to rush you into a decision or make it seem like these brands are a 'once-in-a-lifetime' opportunity, they are likely working for their commission, not for you.