2022 AFDR, Part 5: Sales Closing Ratios

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.

The ratios of leads to sales, qualified leads to sales, applications to sales, and discovery days to sales make up another critical set of metrics for evaluating the effectiveness of a franchise development team. Lead quality is a huge factor here, and brands with pre-qualifiers generally report better closing ratios.

Overall leads-to-sales ratios, which rose from 2.9% in 2019 to 3.5% in 2020, retreated to 3% in 2021. The ratio of qualified leads to sales, although a fairly healthy 11%, fell from 13.5% in 2020 and 15% in 2019.

The applications-to-sales ratio of 14% in this second pandemic year fell significantly from 23.5% in 2020, and further from the peak of 26% in 2017.

The discovery days-to-sales ratio, at 66%, also fell from last year’s 73%. For perspective, for the years 2012 through 2018, this ratio averaged just below 70%, ranging from a low of 61% in 2015 to a high of 77% in 2013.

Chalk up this year’s lower numbers to pandemic-related uncertainty about the future? To more people WFH dipping their toes into the franchising waters, ready to explore the possibility of a career shift from employee to business owner, but not yet ready to take the leap? As Phibbs noted last year, “These ratios all go back to understanding your target audience.” Easier said than done in today’s environment.

Next time: Brokers