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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.

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 used, but may not be specific to each brand.
• Unit-level economics are king, and if a franchise cannot make money, it cannot get a payback on its initial investment.
• Brokers have disrupted the industry by capturing all the leads, making it harder for franchisors to sign new franchisees.

Art Coley, CEO of CGI Franchise and the ROS Framework, believes that franchisors must be willing to get honest and transparent about their recruitment systems. He advocates for prioritizing transparency, attention to unit-level profitability, and recruitment strategies that are aligned with long-term franchisee success.

• A strong recruitment system must have the right priorities, including transparency and attention to unit-level profitability.
• Coley's company, ROS, provides manual systems and analytics for lead generation, appointment setting, sales, and onboarding through 36 months.
• ROS's model is focused on scalability, durability, and wealth generation for franchisors and franchisees.

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 emphasizes that reclaiming the potential of the industry requires development leaders to confront the uncomfortable realities of how franchising has changed.

• The industry has changed, with hidden broker kickbacks and financial models that make ownership increasingly inaccessible for hopeful entrepreneurs.
• Coley believes that his company's proven system can help franchisors improve their recruitment efforts and achieve long-term success.

In an interview with 1851 Franchise Publisher Nick Powills, Coley discussed industry benchmarks, capital influence, and the current state of development channels. He emphasized the importance of aligning expectations and focusing on unit-level economics.

• Industry benchmarks can be misleading and create false expectations.
• Franchisors must focus on unit-level economics and prioritize transparency and attention to profitability.
• Coley believes that his company's proven system can help franchisors improve their recruitment efforts and achieve long-term success.

Powills noted that happiness is reachable when expectations are aligned, and that franchisors often have misaligned expectations due to industry data and false pressures from CEOs. Coley agreed, stating that the industry's focus on short-term success and signing franchise agreements can create unnecessary pressure and intelligence issues.

• Misaligned expectations can lead to unhappiness and poor decision-making.
• The industry's focus on short-term success and signing franchise agreements can create unnecessary pressure and intelligence issues.
• Coley's company, ROS, provides solutions to help franchisors improve their recruitment efforts and achieve long-term success.