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Fran X | Tell me why, ain't nothing but a cost per deal

Cost Per Deal. It's a franchise buzz term that is typically backed by unicorns (meaning, we make up magical, not real numbers). What is your real data and what is it telling you about your growth?

By Nick Powills1851 Franchise Publisher
Updated 3:15PM 08/20/21

The Next McDonald's (Big Idea)

Bending the Curve of Cost per Deal!

In this week’s Bottom Thoughts, we discuss the all important and much discussed KPI of cost per deal (CPD), how to calculate it, and how to tie this KPI to real world data.

But once you know your CPD, how do you reduce it? How do you bend the cost curve of CPD?

The basics…

  1. When planning your development budget, don’t just stop at 12 months. Plan out a multi-year budget and plan in strategic reductions to your CPD.
  2. Once you’ve budgeted a reduced CPD for years 2 and 3, you need to back them up by strategic steps that will help you achieve this goal.

Easier said than done… we agree... and if you don’t make real changes to your franchise development marketing and development strategy, your budgeted CPD reductions will be remembered along the lines of fairytales and magical unicorns…

So how do you get there?

You focus within and, along with your outbound marketing and broker strategy, you build deal flow through those within your 1 degree of separation. These are the customers that love your brand, the friends, family, and communities surrounding your franchisees and that are watching you celebrate franchisee wins, and individuals that you may not know exist but that are watching you - that are listening to the stories you’re telling and the mission you are serving.

What stories is your internal team telling (weekly) on YouTube? What victories are you sharing (weekly) on YouTube?

News You Can (Actually) Use

Killer Brands

Legato Living is a residential home-based assisted living facility for individuals suffering from memory impairment. This franchise is an alternative to institutional care and provides its residents with the amenities and comfort of a single family ranch style home.

Legato Living offers both individual home franchises and area development franchises and is backed by an amazing team. Check out their Franchise Opportunity website to hear about their compelling brand story.

Franchisees Kicking Ass: The Franchisee Is King

The Great Franchisee: Colby Wilcock, Dog Training Elite*, Utah

Here’s why franchise marketing pro Wilcock selected the fast-growing dog training brand as his first franchise investment.

Around ten years ago, Colby Wilcock, along with his partners Amber and Roy Christiansen, started a franchise marketing agency. In the years since, they’ve kept an eye on franchise opportunities they felt were particularly well-suited to their own goals and interests. This year, they took the leap, becoming first-time franchisees with Dog Training Elite*, one of the country’s leading obedience and specialized training brands.


Yo Broker, Sell My Franchise

Top Franchise Brokers: Doug Stout, The Franchise Consulting Company

With 17 years of experience in the franchise industry, Doug is passionate about helping franchise owners find long-term success.

After being laid off for the second time in his career due to company buyouts and low company funds, Doug Stout made a major career change and found his calling in franchising. Over the next 17 years, he bought not one, not two, but three franchises — with The Entrepreneur’s Source, Always Best Care Senior Services and Pro Martial Arts. With those accomplishments came time away from home, and he soon began searching for work that would allow him to spend more time with his family. That’s when he met Nick Neonakis, CEO of The Franchise Consulting Company, and joined their team of franchise experts.

Stout believes his dedication to listening to his clients’ wants and needs is what has led him to be a successful franchise consultant. “I really try to build a business plan for them,” he said. “I listen to them, try to understand what they want and what they want their business to do. What are their goals and lifestyle aspirations? Is their business going to be a legacy for their kids? You have to like what you do, but it also has to get you someplace, and I help them get there.”


The Bottom Thoughts

Cost Per Deal. It's a franchise buzz term that is typically backed by unicorns (meaning, we make up magical, not real numbers). Unicorn numbers are certainly franchise widespread, but does it have to be? What is your real data and what is it telling you about your growth?

So, how do you figure out your CPD?

Step 1: What did you spend over the last 18 months (our recommendation is to look at a longer time period, because, well COVID, and zees are taking their time).

Step 2: How many deals did you get done? Two ways to look at this -- new operators in or total deals. Both numbers are valuable.

Step 3: Divide.

Now, if you want to have some real franchise fun -- go do the same thing for the period before (another backwards 18 months).

Your numbers are your numbers. It isn’t an average or comparable to other brands. Why? Too many metrics -- unit volume, unit count, leadership depth, who’s doing sales, franchisee validation, strength of brand …

*This brand is a paid partner of 1851 Franchise. For more information on paid partnerships please click here.