Selling a franchise business in the UK can be a complex process. From valuing the business to finding serious buyers and negotiating terms, there are many steps involved. This is why many franchise owners choose to work with a business broker. One of the first questions sellers ask is how much a broker will charge. Understanding the typical broker fee structure in the UK will help you plan your sale and avoid surprises.
What Does a Franchise Broker Do?
Before looking at fees, it is important to understand the role of a broker. A franchise or business broker helps sellers prepare their business for sale, market it to potential buyers, manage enquiries, and guide negotiations. They may also assist with valuing the franchise and coordinating with solicitors and accountants during the sale process.
In the UK, brokers act as intermediaries between seller and buyer. Their goal is to secure a sale at the best possible price while keeping the process smooth and professional.
The Average Broker Fee in the UK
In the UK, the average broker fee for selling a franchise business typically ranges between 10% and 30% of the final sale price if using an experienced broker. The exact percentage depends on several factors, including the size of the business, the complexity of the sale, and the broker’s experience.
For smaller franchise resales, especially those under £250,000, fees may be closer to the higher end of that range. For larger and higher-value businesses, the percentage may decrease, although the total fee amount will naturally be higher due to the larger sale price.
Some brokers may operate on a sliding scale, where the percentage reduces as the sale price increases.
Commission-Based Structure
Most UK brokers work on a commission basis. This means they are only paid if the sale completes successfully. This structure can be reassuring for sellers because it aligns the broker’s interests with achieving a sale.
For example, if a franchise sells for £200,000 and the agreed broker fee is 10%, the broker would receive £20,000 plus any applicable VAT. It is important to clarify whether VAT is included in the quoted percentage or added on top.
Retainers and Upfront Fees
While many brokers operate on commission only, some may charge an upfront marketing fee or retainer. This fee covers the cost of advertising the business, preparing sales documents, and listing the franchise on relevant platforms.
Upfront fees in the UK can range from a few hundred pounds to several thousand, depending on the level of service provided. Always ask for a clear breakdown of costs before signing an agreement.
What Affects the Broker Fee?
Several factors influence the percentage charged. The value of the franchise, the ease of sale, the sector, and the level of support required all play a role. A well-performing franchise with strong financial records may be easier to sell and could attract a lower commission rate.
The reputation and experience of the broker can also affect fees. Established brokers with a strong track record may charge more but may also achieve higher sale prices.
Is a Broker Worth the Fee?
While broker fees can seem high, many sellers find the expertise and time saved to be valuable. Brokers understand how to market franchise resales, qualify buyers, and negotiate effectively. This can reduce the risk of deals falling through and help achieve a fair market price.
However, it is always important to compare brokers, review contracts carefully, and ensure you understand the fee structure in full.
Conclusion
The average broker fee for a franchise sale in the UK typically ranges from 10% to 30% of the final sale price, with some brokers also charging upfront marketing fees. The exact cost depends on the size and complexity of the business, as well as the level of service provided. Before appointing a broker, ensure you fully understand the commission structure and any additional charges. With the right support, a broker can help you achieve a smooth and successful franchise sale.
About The Author
