The Future of Franchising is Bright


By Cody Crail

Every year the Franchise Leadership & Development Conference puts major effort into generating a thorough report on the status of franchising in the U.S. They do this by surveying hundreds of franchise companies ranging from international best-in-class established brands to new, emerging concepts with only a handful of franchisees, and everyone else in between. Their Annual Franchise Development Report (AFDR) has become the gold standard for data pertaining to franchising. From marketing trends, average corporate budgets, close percentages, industry performance, and more, the AFDR is full of incredible information and insight!

As you can imagine, the results of the 2020 report displayed the staggering extent to which the COVID-19 pandemic impacted franchise development across the U.S. However, it also shed light on the leading companies who forged ahead with creative approaches and out-of-the-box thinking to continue their franchise growth.

Here are some key stats from the report:

-Average cost per lead in 2020 was $312; that compares with

$213 in 2019, and $126 in 2018. 

-Average cost per sale in 2020 was $12,138 (marketing costs); up significantly from 2019’s average of $10,500 and 2018’s average of $8,984.

-60% of companies surveyed reported an increase in lead quality during 2020, as those showing first-time interest in franchising were more serious about it than in previous years.

-Shifting trends in the allocation of spend looked like this:

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With the shutdown of nearly all conferences and trade shows, digital advertising filled in that space with more allocation of total marketing spend than ever before.

You can spend days sifting through the results of the AFDR and still experience complete shock regarding how substantially franchising was impacted in 2020. However, the good news is that companies largely weathered the storm by investing in processes to resell existing locations, and pivoting into new ways of delivering products and services. And now, as we get to the other side of the pandemic, we’re seeing a sizable new crop of entrepreneurs. Not only are more people looking to get into business for themselves than ever before, but filings for new franchise companies are also at all-time highs. The future of franchising is as bright as ever!

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