2021 Annual Franchise Development Report – Sales Closing Ratios

As we settle into summer – and despite potential threats from new Covid variations – franchise brands continue their shift from survival to recovery to growth. That’s why we started this series of highlights from the 2021 Annual Franchise Development Report (AFDR). We began with an overview of the research, analysis, and methodology used in the report.

The previous issue focused on measuring cost per lead and cost per sale. Background The results from the 2021 AFDR were unveiled last October at the first-ever Franchise Leadership & Growth Virtual Conference (FLGVC). New in this year’s report is survey data on the effects of the Covid-19 pandemic and new statistics on the changing role franchise brokers play in the development process.

Because of Covid, the AFDR was combined with the Annual Franchise Marketing Report (AFMR) this year. Participants in the survey consisted of franchisors that completed an in-depth online questionnaire. Responses were aggregated and analyzed to produce a detailed look into the recruitment and development practices, budgets, and strategies of a wide cross-section of franchisors.

The data and accompanying commentary and analysis provide the basis of the 2021 AFDR/AFMR. Highlights from the report were presented in a general session at the conference by Franchise Update Media’s EVP and Chief Content Officer Diane Phibbs and CEO Therese Thilgen. Ordering information is at the end of the article.

Conference attendees received a complimentary copy. Sales closing ratios Another crucial set of metrics in evaluating the effectiveness of a franchise development team are the ratios of leads to sales, applications to sales, and discovery days to sales. Lead quality is a huge factor here, and brands with pre-qualifiers generally have better closing ratios.

In a separate survey question, 60% reported their lead quality was up pre-Covid. During Covid, however, just 39% of respondents reported their lead quality was up, 35% said it was the same, and 23% said it was down. Leads-to-sales ratios rose from 2.

9% in 2019 to 3.5% this year. The ratio of qualified leads to sales, although a fairly healthy 13.

5%, still fell 1.5% from last year. The application-to-sales ratio also fell during this year of the pandemic, dropping 4% from 2019 to 23.

5%. The discovery-days-to-sales ratio, at 73.4%, also fell this year, by 3% from 2019—though it’s uncertain how much shifting from in-person to virtual discovery days was a factor here.

This shift in lead quality is a factor in the change in these stats,” said Thilgen. Additionally, with the economy on hold, 38% of respondents temporarily or permanently paused franchise development efforts because of the coronavirus, 7% paused everything, and 34% didn’t pause anything. “Again, these ratios all go back to understanding your target audience,” said Phibbs.

Next time: Brokers Ordering Information As an additional bonus, the AFDR was combined with the Annual Franchise Marketing Report (AFMR) this year. The price for the combined report is $350. As noted, all conference attendees received a complimentary copy.