20 Franchise Brands You Could Buy and Open in 2017

The traditional franchise sales model is failing. Brands prioritize short-term success in the form of unit signings and franchise fee collections. Bloated — and undisclosed — broker fees leave them low on funds to support the small business owners they’ve just signed.

Franchise sales model issues

Development teams accept sweeping industry averages, like a $13,000 cost per lead or a 1% deal-to-lead rate, rather than looking at the reality of their own system and examining the operational factors that could be influencing franchisee interest. Closing a deal has become the goal, not signing, onboarding and supporting a right-fit owner who will truly be successful in the system, and this pushes a lack of transparency that harms the entire industry. While a recent FTC settlement may represent some movement in the right direction, the industry at large needs a reset.

• Industry benchmarks such as a $13,000 cost per lead or a 1% deal-to-lead rate are often based on averages and do not reflect the specific needs of individual brands.
• Development teams often rely on these averages rather than examining their own systems and operational factors that could be influencing franchisee interest.

Art Coley, CEO of CGI Franchise and the ROS Framework, believes that the industry needs a reset and that franchisors should prioritize transparency and unit-level profitability. He advocates for recruitment strategies that are aligned with long-term franchisee success.

• A great business model is only as strong as the recruitment system behind it.
• A strong recruitment system must have the right priorities, including transparency, unit-level profitability, and long-term franchisee success.

Coley's company, ROS, provides manual systems and analytics for lead generation, appointment setting, sales, and onboarding through 36 months. He believes that franchisors should focus on scalability, durability, and wealth generation for both franchisors and franchisees.

• ROS ties its compensation to the performance of franchisees over five, 10, or 15 years.
• The company provides a proven system that works and can show franchisors the data to support it.

Industry reform needed

Coley highlights that more people than ever are actively choosing franchising, and there are still many franchisors who truly care about the success of their franchisees. He believes that reclaiming the potential of the industry requires development leaders to confront the uncomfortable realities of how franchising has changed.

• Hidden broker kickbacks and financial models that make ownership inaccessible for hopeful entrepreneurs are major issues in the industry.
• Franchisors who truly care about the success of their franchisees are still out there, and Coley believes that they can make a difference by prioritizing transparency and unit-level profitability.

Coley joined 1851 Franchise Publisher Nick Powills to discuss industry benchmarks, capital influence, the current state of development channels, and what it will take to bring the industry back to a supportive, small-business-owner-focused model.

Powills and Coley discussed how the industry's reliance on industry benchmarks can lead to false expectations and a lack of transparency. They also talked about how the industry's focus on short-term success can lead to a lack of support for franchisees.

• The industry's focus on short-term success can lead to a lack of support for franchisees.
• Franchisors who prioritize transparency and unit-level profitability can make a difference in the industry.

Coley believes that the industry needs a reset and that franchisors should prioritize transparency and unit-level profitability. He advocates for recruitment strategies that are aligned with long-term franchisee success.

Powills and Coley concluded that the industry needs to focus on building successful businesses rather than just signing franchise agreements. They believe that franchisors should prioritize transparency, unit-level profitability, and long-term franchisee success.

• Building successful businesses is the key to long-term success in franchising.
• Franchisors should prioritize transparency, unit-level profitability, and long-term franchisee success.