The report highlights major trends that are impacting franchise sales and development.
The 1851 Franchise Sales Trends Report pulls select data from FranConnect’s Franchise Sales Index (a robust data pull from FranConnect's 700+ client database). The Sales Index was created after a conversation between FranConnect President and Chief Customer Advocate Keith Gerson and No Limit Agency and 1851 Franchise Chief Development Strategist Sean Fitzgerald, in which they wanted to aggregate and anonymize franchise industry data to be able to study statistics and identify trends across hundreds of brands.
Click on the image above to request the full FranConnect Franchise Sale Index Report 2018
“With so many changes taking place annually in the franchising industry, it’s important that we have an updated analysis on industry numbers and trends,” Gerson said. “We’re very excited about this year’s report and we know it will be an invaluable tool for the franchising industry as we look ahead to 2019.”
This year’s report analyzes comprehensive sales performance data from 2017 from 462 of FranConnect’s 700-plus clients, and provides valuable insights into the metrics that matter most to brands, such as lead generation, conversion rates, sales cycle length, response times and more.
“The report is created from data taken from FranConnect, and has a sample size of nearly 500 brands,” 1851 Chief Development Strategist Sean Fitzgerald said. “The numbers speak for themselves, and there’s a lot of good general insight in the report for brands to use when measuring their own KPIs.”
Click on the image above to view the 1851 Franchise Sales Trends Report.
One of the major takeaways from the report is that lead closure rates rose to 1.6 percent compared to 1.2 percent in last year’s report. Overall average leads per month went down, which indicates that brands are beginning to focus on the quality of leads versus focusing on getting a high number of leads, Fitzgerald said.
The top lead generation sources were portals at 35.9 percent. Franchise development websites came in second at 23.2 percent. With franchisors focusing more on the quality of leads, it will be interesting to see how the portals will adjust to accommodate this new direction.
When it came to the leads-to-application ratio, referrals from franchisees came in at 4.8 percent, brokers at 4.1 percent, with 3.8 percent coming from an organic source and 2.6 percent coming from the website. It is clear that candidates who are familiar with the brand, through direct referrals of franchisees or brokers, are far more likely to engage with brands. Validation of a brand remains critical even in the early stages.
The top leads by state include California at 12.3 percent, Texas at 10 percent, Florida at eight percent, and North Carolina close behind Florida at 7.9 percent. There isn’t a surprise here other than North Carolina, which is a state to keep an eye on for future development.
In terms of top sales deal sources, referrals had the highest leads-to-close percentage at 5.64 percent, with brokers coming in at 3.81 percent and websites at 1.57 percent. Portals came in at 0.72 percent.
“This is an indicator that validation or third-party recommendation has a major influence on franchise candidates,” Fitzgerald said.
Another significant report finding was that the average number of days from lead to close soared from an average of 137 days to an average of 179 days. Emerging brands under 200 units saw more than 230 days, while established brands with more than 200 units saw an average of 278 days.
“This is an indicator that candidates will conduct their research long before they are willing to engage in the awarding process,” Fitzgerald said. “There is a long data collection period where the candidates were looking for content, validation or another trigger to take action.”
The top portals by total sales deals were BizQuest at 2.3 percent, Entrepreneur at 1.9 percent, BizBuySell at 1.2 percent, Franchise Direct at 0.8 percent and Franchise Gator at 0.5 percent.
The top brokers by deals were FranChoice at 7.8 percent, FranNet at 5.4 percent, The Entrepreneur’s Source at 4.3 percent, Franserve at 1.9 percent and IFPG at 1.9 percent.
Industry professionals can expect to see further analysis of this report and its findings throughout the year.
“In the months ahead, 1851 Magazine will continue to dive deeper into the findings to shed light on the latest trends and numbers in the FranConnect Report,” Fitzgerald said.
Ranking: Top Franchise Sales Source
- Website - 26.6% (1.57%) - lead to close ratio
- Portal - 18.8% (0.72%)
- Referral - 15.4% (5.64%)
- Broker - 8.3% (3.81%)
Ranking: Top Franchise Sales Lead Generation by Source
- Portal - 35.9%
- Website - 23.2%
- Other - 23.1%
- Trade shows/Conferences - 7.8%
Ranking: Top Franchise Sales Leads by State
- California - 12.3%
- Texas - 10.0%
- Florida - 8.0%
- North Carolina - 7.9%
Ranking: Top Franchise Portals by Sales
- BizQuest - 2.3%
- Entrepreneur - 1.9%
- BizBuySell - 1.2%
- Franchise Direct - 0.8%
Ranking: Top Franchise Sales Ratio by Broker
- FranChoice - 7.8%
- FranNet - 5.4%
- The Entrepreneur’s Source - 4.3%
- Franserve & IPFG - 1.9% each