1851

The short answer to the question of how much it should cost to sell your franchise opportunity is the industry standard: $10,000 - $12,000 in franchise marketing per deal. However, that answer is vague and not specific. In fact, despite you not wanting to know this, it is changing. The cost per deal is skyrocketing. Here&rsquo;s why:

We recently hosted a franchise mastermind at our office (read other findings in the previous column &ndash; <a href="https://1851franchise.com/details/2703641/Everyone-s-Problems-are-the-Same-That-s-the-Opportunity#category" target="_blank">click here</a>). Brands that had 1,000 units had the same goal as brands with 150 units. Their marketing budgets varied &ndash; including a 1,000+ unit brand having less budget for development than an 80-unit brand.

Collectively, the brands at our mastermind had the following data:

Total Goal for 2017: ~250

Total Development Budget for 2017: ~ $1,000,000

Average Per Deal: $4,000

One brand is getting a deal per $50,000. Another brand is getting a deal per $1,000. Group conclusions:

<ol>
	<li>Based on brand size and awareness, lead flow changed. For instance, a consumer product brand with 1,000 locations naturally had better lead flow than one with 100 locations.</li>
	<li>The group agreed that the majority of deals came through referrals and fans of the brand.</li>
	<li>Unit-level economics and validation were the two most important pieces in turning a lead into a deal.</li>
	<li>For all brands, qualified applications were higher this year over last; yet every brand still focused on leads first.</li>
</ol>

If 84 percent of b-to-b deals come from referrals or fans of the brand, then the budgets were mainly used for attracting the 16 percent. Thus, the numbers change a bit when looking for the 16 percent:

Total Goal for 2017: ~40

Total Development Budget for 2017: ~ $800,000

Average Per Deal: $20,000

The $20,000 per deal seemed more fitting as a general number. That number, however, is irrelevant with the bigger brands. The bigger brands had the smallest budgets, despite trying to sell secondary markets (less needles, bigger haystack).

So, here&rsquo;s the scale we would suggest in budgeting for deals:

Over 250 Units: $10,000/deal in franchise marketing

100 &ndash; 249 Units: $15,000/deal

50-99: $20,000/deal

1-49: $25,000/deal

These numbers will change based on the category; the heat of that category (is it home improvement or is it fast casual pizza?); the strength of the &ldquo;Why You?&rdquo; and the &ldquo;Why Now?&rdquo;; the depth of the friends and family; the website and media credibility; and the support of the system to grow (does marketing, operations and sales all work in unison?).

The numbers will continue to go up. If today there are 50 franchisors spending $100,000 each on development to get deals, tomorrow there will be 75 franchisors spending $125,000 each. The mastermind agreed that the total number of people wanting to buy a franchise is decreasing, too &ndash; since the forces to quit your job and make a giant change are slightly lessened when the economy is in OK shape.

The bottom line: Franchise development is hard &ndash; possibly the hardest widget to sell, period. Selling ice to an Eskimo seems easier and, perhaps, more cost effective.

How Much Should it Cost to Sell Your Franchise Opportunity

1851 Franchise

The cost that brand's spend per deal is skyrocketing. No Limit Agency CEO Nick Powills explains why.

how-much-should-it-cost-to-sell-your-franchise-opportunity

TruBlue Home Service Ally

TruBlue Franchisees Champion Fall Prevention To Keep Seniors Safe at Home

trublue-franchisees-champion-fall-prevention-to-keep-seniors-safe-at-home

Pet Wants

FOX Reno: Summer Pet Safety With Pet Wants of Sparks

fox-summer-pet-safety-with-pet-wants-sparks

Workout Anytime

Workout Anytime Teams Up with Viral Baseball Star Kyle “KJ” Jackson to Inspire Fitness Journeys Nationwide

workout-anytime-teams-up-with-viral-baseball-star-kyle-kj-jackson-to-inspire-fitness-journeys-nationwide

Sola Salons

1851 Franchise Deep Dive graphic with Sola Salons logo

Sola Salons Franchise Costs, Fees, Profit and Data for 2025

franchise-deep-dive-sola-salons-franchise-costs-fees-profit-and-data

Paris Baguette Canada

image of paris baguette cake and franchise decorations

What Canadian Franchisees Want to Know: Paris Baguette Profit Potential and Franchisee Support

paris-baguette-franchise-canada-profit-support

Buying a Franchise Masterclass

 Franchise Opportunities

Get Support Buying a Franchise

How to Buy a Franchise White Paper

How to Buy a Franchise

How to Sell Franchises

How to Grow a Franchise

Find a Franchise Supplier

1851 Franchise Opportunities

Franchisor News

Franchisor Power Rankings

FranCamp Mastermind Summit

Franchise Development Website Builder

Franchise Resources

What ALEC-Laffer's Report Means for Franchising

Website Awards

Power Rankings

About 1851

Advertise on 1851

Contact 1851 Editorial

Terms of Use

1851 Login

GROWTH CLUB LOGIN

facebook

instagram

twitter

linkedin

youtube

Power Eats: Smoothie King Rolls Out Food Nationwide To Fuel Franchise Growth

smoothie-king-food-menu-power-eats

Keurig Dr Pepper Splits in $18 Billion JDE Peet’s Deal, Creating Global Coffee Giant

keurig-dr-pepper-splits-in-18-billion-jde-peets-deal-creating-global-coffee-giant

McDonald’s Rolls Out Major Value Push To Win Back Customers Amid Inflation

mcdonalds-rolls-out-major-value-push-to-win-back-customers-amid-inflation

Photo of Paris Baguette pastries and beverages 

Paris Baguette Celebrates 250th Café Opening in Frederick, Maryland, Accelerating Expansion and Reviving the Neighborhood Bakery Café

paris-baguette-250th-north-america-cafe

Restaurant Chains Open Their Wallets To Jump-Start Franchise Growth - 1851 Franchise

Restaurant Chains Open Their Wallets To Jump-Start Franchise Growth

restaurant-franchise-incentives-cash-royalty-holidays-fee-reductions

1851 Keyword - The Secret To Succeeding With a Part-Time Franchise Is Picking the Right Model

The Secret To Succeeding With a Part-Time Franchise Is Picking the Right Model

part-time-franchises-picking-the-right-model

"Top 15 Health & Wellness Franchises" note against blue and purple background

Top 15 Health and Wellness Franchises Opportunities for 2025

top-health-and-wellness-franchises

Image of four people in a room. One, wearing an orange shirt, appears to be presenting to the others

Happinest Brands’ Comprehensive, Transparent Approach to Franchise Growth

happinest-brands-transparent-franchise-growth

Franchise Opportunities With High Success Rates - 1851 Franchise

Top Franchise Opportunities With High Success Rates

top-franchise-opportunities-with-high-success-rates

Hooters Leans Into Franchising With Closure of 30 Company-Owned Stores - Agg - 1851 Franchise

Hooters Leans Into Franchising With Closure of 30 Company-Owned Stores

hooters-franchise-model-company-owned-closures

graphic image of a franchisee spotligh aman kaur of voodoo brewing

How This Trio of Friends Is Brewing Up Community With Voodoo Brewing Co. in Prosper, Texas

voodoo-brewing-franchisee-aman-kaur-prosper-texas

Franchise Deep Dive graphic with i9 Sports logo

i9 Sports Franchise Costs, Fees, Profit and Data for 2025

i9-sports-franchise-cost-fees-profit

Hely and Hiral Patel Bring Their Longtime Dream to Life With The Brass Tap

brass-tap-franchise-pasadena-maryland-hely-hiral-patel

1851 Franchisee Spotlight graphic with photo of Dan Ellestad and Seniors Helping Seniors logo

How This Marine Veteran Went From Military Service to Senior Care and Found His Purpose in Franchising

seniors-helping-seniors-dan-ellestad

How Much Should it Cost to Sell Your Franchise Opportunity

MORE STORIES LIKE THIS