Franchisors usually pay a broker a success fee when a referred candidate signs. Many networks also charge for membership, events or marketing to their consultants, and your team spends time on every broker-introduced candidate, signed or not. The structure decides what each broker-sourced agreement costs, so model it at the number of signings you realistically expect from that network before you sign up. A lower success fee with fixed costs can cost more per agreement than a higher fee without them.
This page is for franchisors costing a broker relationship. Deciding between brokers, portals and your own ads is a separate decision, covered in our brokers versus ads choice guide.
Compare all sources in the candidate sourcing scorecard.
A dated illustration of the structures in use
There’s no standard broker fee. One dated illustration is a Franchise Update Magazine feature by Helen Bond (Issue 3, 2023). It reports that:
- broker commissions “vary, but are typically 40% to 50%” of the franchisor’s one-time franchise fee, and brokers earn more when a deal covers several agreements or territories;
- placement fees “average nearly $30,000”;
- one franchisor quoted pays a $30,000 success fee per broker-generated deal, and another pays up to $30,000 in success fees per signing;
- one network’s average franchisor pays about $1,000 a month to market to its consultants, and one franchisor put required broker-event costs, including team travel and logistics, at $5,000 to $10,000 each.
These are 2023 statements from named franchisors and one network. They show the kinds of structures in use, not current rates, and they don’t tell you what your brand would pay. Ask each network for its full schedule in writing.
The elements of an offer
| Element | Paid when | Varies with signings? |
|---|---|---|
| Success fee as a percentage of the franchise fee | An introduced candidate signs | Yes |
| Flat success fee per agreement | An introduced candidate signs | Yes |
| Additional fee per extra unit or territory | A multi-unit agreement signs | Yes |
| Membership, portfolio or marketing fee | Monthly or yearly | No |
| Events and sponsorships | Per event, plus your team’s travel | No |
| Your team’s sales time | On every introduced candidate, signed or not | Partly |
The fixed lines are what make offers hard to compare. They’re paid whether or not anyone signs, so their cost per agreement depends on how many agreements the network actually produces.
Worked model: one franchisor, three offers
Fictional example. A US franchisor, USD. Franchise fee $45,000 for a first unit and $25,000 for each additional unit. Every number is an assumption to replace with yours, not a quoted rate.
| Offer | Success fee per agreement | Fixed network cost per year |
|---|---|---|
| 1. Percentage: 45% of the franchise fee | $20,250 | $0 |
| 2. Flat fee | $30,000 | $0 |
| 3. Membership ($1,000 a month) plus two events ($7,500 each) plus 40% of the franchise fee | $18,000 | $27,000 |
Sales time is an allocation assumption. This franchisor’s reps logged about 60 hours per broker-sourced signing last year, counting time on introduced candidates who didn’t sign, at a loaded $85 an hour: $5,100 per agreement. The model assumes those hours rise in proportion to signings. Real workload may not, so check it against your own logs.
Cost per broker-sourced signed agreement, by signings in a year:
| Offer | 2 signings | 6 signings | 12 signings |
|---|---|---|---|
| 1. Percentage | $25,350 | $25,350 | $25,350 |
| 2. Flat fee | $35,100 | $35,100 | $35,100 |
| 3. Membership + events + 40% | $36,600 | $27,600 | $25,350 |
Each cell is success fee + (fixed cost ÷ signings) + $5,100 sales time. Offer 3 at six signings: $18,000 + $27,000 ÷ 6 + $5,100 = $27,600.
A year with no signings still costs money. Cost per agreement can’t be calculated, so report spend instead. In this example the reps spent 40 hours on introduced candidates who didn’t sign, which is $3,400 at $85 an hour:
| Offer | Success fees | Fixed cost | Sales time | Spend with no agreements |
|---|---|---|---|---|
| 1. Percentage | $0 | $0 | $3,400 | $3,400 |
| 2. Flat fee | $0 | $0 | $3,400 | $3,400 |
| 3. Membership + events + 40% | $0 | $27,000 | $3,400 | $30,400 |
What the model shows, under these assumptions:
- Offer 3’s lower success fee only pays off at volume. With the same sales-time assumption on both sides, it matches Offer 1 at exactly 12 signings a year ($27,000 ÷ ($20,250 − $18,000) = 12), and is cheaper only above that.
- Offer 3 beats the flat fee above 2.25 signings a year ($27,000 ÷ ($30,000 − $18,000)). At two signings it’s the most expensive option.
- The signing estimate decides it. These scenarios don’t forecast what any network will produce. If your own history doesn’t support twelve or more broker signings a year, Offer 1 is the cheaper structure here, even with the higher percentage.
Multi-unit deals, fees only. Under Offer 1, a three-unit agreement carries $20,250 + 2 × (45% × $25,000) = $42,750 in success fees: $42,750 per agreement and $14,250 per awarded unit. Those are fee-only figures, before fixed costs and sales time. Report per agreement and per unit as separate numbers.
Questions to get answered in writing
- What exactly triggers the success fee: a signed agreement, a paid franchise fee, or something else?
- What’s paid on multi-unit agreements and on later units the same franchisee adds?
- What happens to a fee if an agreement is cancelled or reversed?
- Which fixed costs are required to receive introductions, and which are optional?
- How long does the broker keep credit for a candidate who also came through your own ads?
- What candidate information do you receive, and when?
Contract terms are for your franchise counsel. These questions make sure you can model the cost before that conversation.
Keep the comparison honest
When you compare broker-sourced agreements with your own channels, use the same cost scope on both sides: fees, fixed costs and sales time for brokers; media, agency, production and sales time for owned channels. Compare complete inquiry cohorts over the same observation window and with the same candidate and cost definitions. Report stage mix to explain differences; selecting only candidates who reached the same advanced stage would hide source drop-off. Label results with open candidates as provisional. Our cost per signed franchise guide shows how to allocate a broker fee paid months later back to the inquiry cohort, and the source tracking guide covers recording contractual broker credit separately from marketing attribution.
Download the model: MUS-broker-fee-model.csv and its assumptions. Change the franchise fee, offers, hours and signing estimates to match the offers on your desk.
If you’d like us to run your broker offers and your owned channel through the same model, bring both fee schedules and a year of signings by source to a diagnostic call.
Related: franchise advertising · cost per franchise sale calculator · CRM attribution
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