People use these two words interchangeably but it can be really confusing for founders when they begin hunting for assistance. They are not the same thing, and the confusion can lead to a lot of disillusionment.
What is franchise development companies? Franchise development is the process of developing the whole system: Legal documentation, operation manuals, training programs, territory plans, sales process etc. Development is essentially construction work – it’s creating the entire, location-based enterprise from scratch so it is set up to grow. Development firms tend to work with brands even before the first franchise sale.
Franchise consulting is different. It tends to be a narrower offering, and often occurs on the post-mode side of the process. Franchise consultants typically advise existing franchisors on strategy.
Should a franchise business grow into a new location?
Change royalties? Increase franchisee retention? Franchise consultants usually don’t write franchise disclosure documents, or create training systems from the ground up.
And then there’s franchise brokering, the third business people confuse with the other two. It is where you act as an intermediary between an individual investor and a franchise opportunity that’s already developed and you’re paid a commission by the franchisor if a deal closes. You don’t develop systems or provide franchisee support.
Others cross these lines intentionally with a development, consulting and brokering package designed to operate in different markets. That’s not necessarily wrong, but the founder needs to be asking specifically which service they’re buying at each stage. A brand a couple of years old with franchisee complaints needs a consultant to resolve issues, not a developer starting from scratch.
A quick definition at the start prevents a lot of frustration. A founder calls a broker looking to draft an FDD, a broker calls a founder to “help us fix some franchisee disputes” in an existing system. Be sure you’re providing the appropriate service for the requirement before that first contract is even signed.