Franchise Update Media (FUM) is a valuable and trusted resource for the franchising industry. Their multi-channel approach to providing insight and thought leadership is beneficial for insiders and entrepreneurs to keep their finger on the pulse of the franchising sector. Each year, this organization issues their franchise development report – a state of the industry, if you will. FranNet has reviewed this year’s edition and would like to share some of the most interesting and intriguing updates for our readers with an entrepreneur mindset.
The data and statistical findings found in Franchise Media Group’s 2022 AFDR were based on an in-depth online questionnaire sent to over 120+ franchisors operating in multiple industries and business sectors. From the wide range of data and statistics, here are some of the report’s most interesting takeaways:
The Success Rate of Franchise Brokers
For the second consecutive year, survey participants were queried about the use of franchise brokers. Of those who responded, approximately half (49%) acknowledged that they use brokers to augment lead-generation and deal-closings. And about seven in 10 respondents reported that their franchise closed a deal through a broker within the past 12 months. Here’s where the success rate of brokers really comes into focus: in the sales closing ratios, the leads-to-close rate for brands using brokers was 17%. That’s compared to a 3% rate for brands who attempted to close their own leads. 40% of all respondents reported that a broker helped the brand initiate contact with a lead all the way to a successful deal closing. The final paragraph of the report states the following: “…it’s no surprise that brokers specializing in franchising have a higher success rate than those who don’t.”
Targeting New Leads
Because the industry was still dealing with restrictions under the pandemic’s conditions, budget allocations for targeting new leads revealed a shift in strategy. Spending on digital outreach accounted for 40% of marketing budgets, but its effectiveness in reaching the target market improved from 23% to 26%. Referrals maintained the highest success-to-spending ratio, with 14% of the marketing budget, but a 40% effectiveness rate. Trade show spending in 2021 still hasn’t recovered to pre-pandemic levels but managed a 4% spend for 4% effectiveness.
Measuring Success
One of the most surprising survey revelations in the 2022 AFDR? Only half of the brands appear to be tracking their cost per lead data, down from almost 80% two years ago. Among franchisors who did track this metric, three quarters revealed they met or exceeded their target goals.
There’s much more to digest in the report’s 200+ pages of data, whose title in 2022 is “If you can’t measure it, you can’t control it.” Six sections are included, such as 1) composite survey results, 2) industry analysis by group, 3) analysis of targeting goals, 4) systemwide revenue, 5) domestic franchised units in operation, and 6) total franchise investment per unit. You can order a copy online by following this link.
If you’re ready for the next step in your career, perhaps it’s time to begin an entrepreneurial journey of your own. We can help you get started today by setting up a no-cost, no-obligation appointment with a qualified FranNet representative who both lives and works in your area. Together, we can find a franchise ownership opportunity that matches up perfectly with your lifestyle and income-oriented goals.