One of the biggest challenges facing most franchisors, is franchisee recruitment. Emerging franchisors typically have less well-known brands and do not have the full success story yet – franchisees who have started, thrived and ultimately sold their franchise businesses. And even the most established franchisors have challenges – they are often looking to only recruit franchisees in certain regions where they have coverage gaps, so need a more targeted approached towards recruitment.
WorkBuzz and the British Franchise Association teamed up to combine data from 90 franchisors to help benchmark franchisee recruitment, fee structures and support, learn these from one another and make smarter decisions. Participating franchises ranged in terms of investment level:
- Less than £15k investment (16 franchisors)
- £15k – £50k (26 franchisors)
- £50k – £100k (21 franchisors)
- £100k+ (27 franchisors)
Through this article, we wanted to share some of the key headlines.
On average franchisors generated 318 franchisee recruitment leads in 2021:
The most commonly used lead generation channels were franchisors’ own websites, social media and referrals:
Overall franchisors most effective lead generation channels were their own website, followed by referrals and dedicated franchise recruitment websites/portals:
Whilst it’s easier to measure leads generated online, almost half of franchisors still relied on franchise exhibitions and events, which often help with build brand awareness and build trust with prospective franchisees.
Only 1 in 100 enquiries become franchisees
Whilst the typical franchisor generated several hundred recruitment leads in 2021, 9 in 10 of these were ruled out during the initial stage and only 1.3% eventually went on to invest in their franchise opportunity. This raises a question, how can franchisors improve this low conversion rate to accelerate their growth?
During a recent webinar, the British Franchise Association and WorkBuzz discussed this with industry experts. Suggestions included ensuring the recruitment process is franchisee centric, the right information is provided at the right stage and industry best practice is being followed. Given it’s a huge personal decision to invest in a franchise and establish their own business, some potential franchisees may not be ready now to invest, but may be in the future. Top franchisors nurture these opportunties over time and build trust, so when a candidate is ready, they are front mind.
Franchisor Fees
The majority (77%) of franchisors charge franchisees a management service fee – the average being 9.5%, whereas 7% charge a fixed fee and 2% a markup on products they buy:
In terms of support, most franchisors prioritise local marketing and business planning support, plus help with staff recruitment. But more franchisors can invest in resale / exit training and high performance group training:
To receive a copy of the full report by WorkBuzz and the British Franchise Association, please email sharon.weston@workbuzz.com.