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. We plan to look further into the role and success rate of brokers in 2022.

For more on brokers, click here to read two feature articles in our Q1 2022 issue of Franchise Update magazine.

Next time: Franchisors Exceeding Goals