FranConnect's Franchise Sales Index Report Holds Critical Insights for Franchisors
FranConnect released its Franchise Sales Index Report for 2020 last week. Now in its fifth year, this annual resource for data, analytics, and insights into the current state of franchise sales contains best practices for franchise operators looking to confront the economic realities of the pandemic.
This year’s edition benchmarks anonymized and aggregated data from 597 franchise brands representing 9 vertical markets: Personal Services; Quick Service and Fast Casual Restaurants (QSR); Table/Full-Service Restaurants; Lodging; Retail Food; Retail Products & Services; Real Estate; Business Services; and Commercial & Residential Services.
“This year's report confirms that there was already a notable decline in franchise sales leads before the pandemic, the result of a then full-employment economy. And now, with unemployment rates having skyrocketed, there is going to be a rush by those seeking new opportunities and a sense of control in these turbulent times,” said Keith Gerson, FranConnect’s President of Franchise Operations. “What the pandemic has accomplished is to reveal the cracks that already existed in many franchise sales programs and systems.”
Some of the most important findings from the report can serve franchise brands as a guidepost to improving their sales effectiveness:
- Total average lead volume per brand fell 12% year over year, likely because of the effects of 2019’s full-employment economy.
- The overall deal closure rate (lead-to-deal ratio) decreased by 10% year over year, as franchise development teams struggled with stronger competition for a smaller overall pool of leads.
- Franchise portals generated the most leads, but ranked fourth in terms of closed deals.
- Referrals and brokers proved to be considerably more effective at helping to close deals, based on lead-to-sales conversion rates relative to the previous year.
- 85% of the leads that resulted in deals were contacted within the first 4 hours of their inquiry, demonstrating the power of “speed to the lead.”
- Lead follow-up processes are not implemented sufficiently in most organizations, as nearly three-quarters of all leads failed to receive meaningful responses.
The full 69-page Franchise Sales Index Report is downloadable free.
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