Do Franchise Portals Work?

Franchise portals are generally understood to be web portals that provide a for-profit service, collecting and selling leads. This is typically done on a non-exclusive basis, and portals are known for producing a high number of leads for a lower cost compared to other lead generation methods and services.

Some franchisors question the integrity of the leads provided by these portals as multiple franchisors and brokers have access to the information, and a single lead may be contacted by several different franchises. Nevertheless, according to Keith Gerson for Franchising.com, “During the first half of 2020, portal leads represented 38% of all lead sources, resulting in the creation of 55,000 leads in Q1.”

“The main advantage of using franchise portals for lead generation is that they give your start-up or small business a higher level of brand awareness. That eventually helps get more traffic, expand your audience base and generate more profit based on high-quality lead generation for your business,” explained Alex Haley, digital marketer and co-founder of YardsNearMe.

Though portals have a strong record of providing high numbers of leads at lower costs and are a great way to gain exposure for a brand, the leads convert at a far lower rate than other sources. While a lead may appear to be highly qualified on paper, things like fit and overall interest are more difficult to evaluate in the portal environment. Franchise portal leads convert at a rate of 0.3%, meaning that an average of 350 leads will be necessary to generate one sale. Regardless of how much exposure a brand receives or how many potential buyers are matched, the conversion rate is what really matters when selling.

Further, the efficacy of franchise portals is greatly impacted by the size and/or type of franchise looking to sell. In one quarter, large enterprise brands secured a whopping 84% of portal deals.

Mandy Rowe, president of True REST Float Spa, explained why franchise portals aren’t the most useful tool for some franchisors. “For us, we’re in an industry, the float therapy industry, where I don’t have any competition,” she said. “I don’t have another franchisor in this space, and it’s such a unique concept right now. About 50% of the people I talk to still don’t even know what floating is when I tell them what I do for a living.”

In cases like Rowe’s, franchise portals may generate leads that are qualified in a financial sense, but they do not guarantee that the lead is also familiar with the business.

“They would send me leads. They were good, qualified people in terms of any financial growth; they had all the right collateral and could get funding. But, when it came down to the operations of running the business, I had to start at square one,” she said. “What is floating? Is this even something you enjoy? Is it a business you would want to run?”

For some franchises, while portals may provide financially-qualified contacts, the additional work required to explain and connect over the business concept simply is not worth the time and money.

Unfortunately, like many business issues, the answer here is “It depends.” Whether franchise portals will work for a specific franchise is a very individualized question. In theory, portals serve as a fantastic resource to gather tons of leads at a relatively low cost. It then becomes the franchisor’s responsibility to evaluate the quality of the leads.

Rowe explained, “I think the larger we grow and the more familiar people become with floating, the easier that will become. In which case, portals might become useful for me. But at the time, as a one-man shop, I would be wasting a lot of my time using portals.”

Because some franchisors are incredibly focused on bringing on franchisees who not only have the capital necessary to join the network but are also committed to the brand and provide a great fit, franchise portals may not be the best resource — they cannot evaluate things like fit. However, in the case that a franchisor is simply looking to establish contact with someone who is financially capable, a portal may be the perfect avenue.