2022 AFDR, Part 6: Use of Brokers

Highlights from the 2022 Annual Franchise Development Report (AFDR) were unveiled at the Franchise Leadership & Development Conference (FLDC) in October. Participants 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, spending allocations, and strategies of a wide cross-section of franchisors.

The data and accompanying commentary and analysis provided the basis of the 2022 AFDR. Highlights from the report were presented in a general session by Franchise Update Media EVP and Chief Content Officer Diane Phibbs and Wild Birds Unlimited CDO Paul Pickett. This series features selected highlights.

All conference attendees received a complimentary copy. This was the second year the AFDR asked participants about brokers: if they used them, how much they paid, what results they found, and their plans to use them in the future. Half (49%) of brands in the survey used brokers, and 7 in 10 (68%) said they’d closed a deal through a broker in the past 12 months.

As shown in the graphic, 7 of 10 respondents (69%) paid fees to a broker network, with and average broker commission of about $20,000 for a successful signing. The leads-to-close ratio for brands working with brokers in 2021 was 17%, compared with the 3% ratio brands reported for bringing their own leads to closing. Respondents reported that 4 in 10 (39%) brokers brought the lead through the pipeline to a successful close.

Results vary, of course, by brand, by sector, and by franchise fee – as well as by the relationship brands establish with the brokers they employ. Still, it’s no surprise that brokers specializing in franchising have a higher success rate than those who don’t. But there’s a price to pay.