Social Media: Does It Sell Franchises (Yet)?

In the ever-changing world of social media, much has changed in how franchisors are using these emerging platforms to reach customers. The use of social media for attracting franchisee prospects, however, lags far behind, with many questioning its use at all in franchise development. Nevertheless, franchisors continue experimenting with LinkedIn, Facebook, YouTube, and Craigslist to reach prospects.

Although selling franchises through social media platforms still ranks quite low in terms of total sales, the numbers are climbing, though slowly, as franchisors learn to use these new channels--and the trend is clearly toward increased adoption, as both franchisors and prospects learn to incorporate these channels into their recruitment and research activities.

In recent years, we've added questions on the use of social media for franchise recruitment to our benchmarking report on recruitment practices, the Annual Franchise Development Report (AFDR). In the 2012 AFDR, which drew on detailed responses from 110 franchisors representing 109,936 total units (79,254 franchised and 30,682 company-owned), we asked franchisors about their use of social media channels as part of their development and recruitment strategy. The data, collected about a year ago, provides a useful baseline as we gear up for the 2013 AFDR.

• Adoption. One important trend to note is that social media channels are producing more sales each year, says Steve Olson, president of Franchise Update Media Group. In 2011, 90 of the 110 respondents (82 percent) placed online ads, videos, or press releases on social or business networks, blogs, YouTube, Craigslist, etc., compared with just 58 of 126 respondents (46 percent) the year before.

What types of social media have you used for franchise recruitment?

• Deals. The trend here is the gradual growth of social media as a sales source. In 2011, 13 of 110 franchisors (12 percent) reported sales from social media, compared with only 5 of 126 (4 percent) the previous year. Olson says franchisors should continue experimenting with social media as a sales tool, integrating it into their overall sales strategy.

Although the totals are still small, they are steadily rising. The 110 respondents in the most recent report notched 37 deals through social media channels, Facebook led the way with 11 deals, followed by LinkedIn (9), YouTube (8), Craigslist (6), and blogging (3). Facebook showed a dramatic upswing, climbing from no sales in the previous two years to lead the category in 2011, says Olson.

Interestingly, says Olson, "Craigslist has produced sales every year since we started monitoring it. You don't have to optimize it, just post 'Franchise Opportunity Available.' It doesn't require the same upkeep and staff time adding content as other online resources. It's low maintenance, like an old classified ad. Everyone should be on it."

In the past 12 months, have you sold any franchises using social media?

Social Media: 37 Sales

Looking ahead, it seems clear that social media will become a part of franchise recruitment. More than half (53.6%) of survey respondents think that will be within two years--and one of those years is already on the books.

Do you believe social media will become a successful franchise recruitment source for most franchisors?

Additional insights: respondents verbatim

"We cannot attribute any direct sales to social media, but it certainly plays a supporting role for all deals we sign when prospects are doing due diligence."

"We've noticed that social media has been more effective in brand validation than lead generation in the sales process."

"Most of our franchisees do not have a clue about social media. Our marketing department uses Facebook and Twitter for advertising, but not a big option for franchise recruiting at this time."

"We hired a company and executed a social media marketing plan to promote franchise development and it was a bust. Eight months in and $80K later, and no leads were generated. Just don't see it as a viable source of lead gen for a B2B opportunity."

"Social media is time-consuming."

"We are in the infancy stages of using and understanding social media."

"I use a Facebook page to connect with candidates who have already contacted me. I get them to fan my page, then I am able to see their page and learn a lot more about them. So part of the application, not always an option, but very, very valuable. Twitter we use to announce new store openings and major events."

"I think social media for franchise sales is the 'new frontier' in cyberspace. I am not sure of how and where it will be successful."

"With an investment ranging from $400K - $600K, social media is just another place to have a presence. The people that can afford and qualify to be a franchisee are not scouring Facebook for ideas."

"It depends on the cost of the franchise and the ideal candidate profile. I do not feel most MU franchisees with significant net worth are using social media as their primary source of franchise information."

"Too early to tell..."

Ordering information

The 150-page report, with analysis and benchmarks, is available for $399. Call Sharon Wilkinson at 800-289-4232 x202, email sales@franchiseupdatemedia.com, or go to www.franchising.com/franchisors/afdr.html.

2013 AFDR

We continually seek ways to further raise franchisor awareness of development standards, and to create additional benchmarks to help speed the adoption of best practices in franchise recruitment. We welcome your comments - and participation - to help us shape the 2013 AFDR. To participate in next year's survey, contact Therese Thilgen at thereset@franchiseupdatemedia.com. All data are aggregated and kept confidential