Examining Franchise Development Budgets

Examining Franchise Development Budgets

Examining Franchise Development Budgets

Franchise Update Media has been researching franchise lead generation and franchise recruitment processes for more than a decade. An annual in-depth online survey queries franchise development professionals about a number of issues related to their lead generation and recruitment strategies. The results are presented each year in the Annual Franchise Development Report (AFDR).

The AFDR is a valuable resource that can provide crucial insights on franchise development, lead generation, and recruitment best practices. It’s the kind of information that can help brands assess what they are doing right, and what needs improvement.

The annual project seeks to identify what’s new and innovative in franchise lead generation, recognize the methods and approaches yielding the best results, and gain insights into franchisors’ perspectives on current and future business performance.

Survey participants were franchisors who completed an in-depth questionnaire online. Responses were aggregated and analyzed to produce a detailed view into the recruitment and development practices, budgets, spending allocations, and strategies of a wide cross-section of franchisors. The data along with accompanying commentary and analysis provided the basis for the 2025 AFDR.

The in-depth report features results from more than 110 organizations actively expanding their franchise systems. The thoroughly researched report spotlights the latest trends and reveals various franchise lead-generation and sales trends. The AFDR represents companies totaling more than 50,000 franchise units and 42 industry categories.

Franchise Update Media creates this report annually and shares its findings with franchise development teams to give them an edge in their lead generation and recruitment efforts.

Franchise development budget increases for 2025

As we begin the new year, this is a good time to take a look at how franchises have set their development budgets for 2025. The average franchise recruitment budget for companies surveyed in this report, including salaries and marketing, is $1,019,869. That is an increase from an average of $734,534 in 2024.

Franchise development employee costs, including salaries, benefits, and bonuses, this year are $575,150, up from $471,155 in 2024. The biggest budgetary increase came in the use of brokers, which nearly doubled from $78,700 in 2024 to $157,740 in 2025. Recruitment budgets for marketing and advertising saw the smallest increase of slightly less than $5,000.

Additionally, 13 percent of the total recruitment budgets for franchisors are higher in 2025 than in 2024 while their sales goals (see chart) are virtually the same. Among the franchises that finalized their 2025 budgets prior to the report, 59 percent planned to increase spending on franchise development. Those franchisors expect to add an average of 45 locations this year, a slight increase of 43 units in 2024.

“There is a 13 percent increase in budget, but the goals for the coming year are flat,” said Franchise Update EVP & Chief Content Officer Diane Phibbs at the FDLC general session in October. “Everyone is looking to spend more money to get the same number of leads.”

The size and scope of franchise development teams have grown in order to reach wider audiences and expand digital strategies. Traditional roles such as sales and lead qualifiers have been recently joined by those specializing in marketing, real estate, construction, and design.

Recruitment budgets: A 10-year trend

Not surprisingly, recruitment budgets have increased over the past decade, particularly over the past four years. Recruitment budget increased less than $10,000 annually from 2015 to 2021, going from an average of $166,693 to $174,770 during that span. As the country came out of the pandemic, that average jumped to $261,543 in 2022 and rose to a projected $268,083 for the current year.

For more information about the 2025 AFDR and how you can purchase the report, please scan the QR code below or click afdr.franchiseupdate.com.

 

Published: January 14th, 2025

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