For many mortgage brokers, loan brokers and professionals in related industries, a debt management franchise may seem an attractive proposition. With the numbers of UK households struggling with debt repayments currently at an all-time high, the debt solutions industry appears to be one of the few areas currently booming.
Therefore, to anyone with little experience of the debt solutions market, buying a franchise is an ideal way to hit the ground running. Buying a franchise should mean buying into an established, well-known name. It should mean expert training from industry veterans. It should mean a ‘holding hand’ in marketing, advertising, and securing regular clients. And any company offering a proper franchise, should really also be supplying debt management leads in order to assist the franchisee in the early stages.
This is where buying into a more established set up could be an advantage. There are many debt management companies that offer a cheap franchise – but cheap is often a false economy and can end up costing much more in the long run. For example, many companies charging cheap franchise fees advertise that this is an ‘attractive feature’ of the proposition, citing the fact that franchisees will have more money for advertising. But there are few guarantees with advertising – sometimes it works but sometimes it does not. Would it not be a safer route to have chosen the more expensive franchise to guarantee a steady stream of leads? Learn to walk before run?
What also seems to be a familiar pattern amongst cheaper franchise offerings, are the spectacular commissions that could ‘potentially’ be earned. With more established, costlier franchise providers, their literature will often state that realistically, 8-10 clients could be signed up per month during the building of the franchise in the first year. With the cheaper franchises, you often see ‘what could be earned if you sign up 30, 40 or even 50 clients a month…’ and these figures are generally banded about as if they will be easily achieved. Yet, according to certain research, some DMC’s reports have shown that the average advertising spend to attract a single client is £250 – meaning that these cheap franchise providers are expecting new franchisees to spend £12,500 per month on advertising?? Laughable!
There is an old adage that is particularly poignant in regards to the subject of debt management franchises – and that is ‘if it looks too good to be true… It probably is.’ There are actually some debt management companies out there that will provide everything a debt franchise promises – without any franchise fees whatsoever. Surely it’s worth testing the water with companies like this first – as there’s nothing to lose whatsoever?
The market for mortgage brokers and loan brokers is still nowhere near the activity levels of 3 years ago, and therefore it is understandable that many professionals may be looking at the debt solutions market. Many of their current client books may make good debt management leads, so whether the franchise route is taken or not, many will have the ammunition to make a success of it immediately anyway.