AFDR
At a time of artificial intelligence and digital everything, the most successful franchisors are finding that the modern path to growth is paved with a mix of cutting-edge tools and a renewed focus on timeless, human connection.
The shift toward a high-tech, high-touch strategy for finding and signing quality franchisee partners was one of the central findings of Franchise Update Media’ s 2026 Annual Franchise Development Report( AFDR), the industry’ s long-standing benchmark for tracking lead-generation and recruitment trends.
In October, Franchise Update Media’ s Diane Phibbs, vice president of content and marketing, and Tim Courtney, vice president of franchise development for PuroClean, took to the stage at the Franchise Leadership & Development Conference( FLDC) to present key findings of the 2026 AFDR.
The session— part data reveal and part call to action— offered a candid look at how franchise development is evolving as brands work to balance trusted partnerships with new technology and redefine what success means in a changing landscape.
2021
2022
2023
2024
2025
Recruitment Budgets
$ 120,000 $ 174,770
$ 140,000
0 $ 50,000 $ 100,000 $ 150,000 $ 200,000 $ 250,000 $ 300,000
2026
$ 200,000 $ 261,543
$ 225,240 $ 185,000
$ 263,409
$ 200,000 $ 268,083
Median: $ 225,000 Average: $ 277,778
Budgets flat, intentions high
Starting with the big picture: Budgets are tight.
The 2026 AFDR survey of franchisors found recruitment spending flat with little real growth since 2022. The average franchise development budget sits near $ 278,000 with the median around $ 225,000. The numbers reflect advertising spend alone, not salaries or overhead.
“ The good news is we’ ve seen budgets definitely increase over the past 10 years with just a leveling off in the past couple of years,” Phibbs said.
When it comes to spending, the trend is optimistic. Of those who have set a recruitment budget, more than half( 55 %) are planning to increase franchise development spending in 2026.
Marketing spend effectiveness
With budgets remaining largely unchanged, franchisors are relying on proven methods to reach and sign high-quality franchisees.
30
25
20
15
10
5
0
% of Spend vs. Highest Lead-to-Close Ratio
29 %
Digital Advertising
20 %
4 % 2 %
Print Advertising
Budget
6 %
Referrals
Lead to Close
30 %
8 %
9 %
3 % 3 %
Trade Shows
Public Relations
20 %
16 %
Brokers
10 %
FranDev Website
22 %
14 %
4 %
Digital marketing remains the core of franchise recruitment, accounting for roughly 29 % of total spend and achieving a 20 % close rate. Franchise development websites claim 10 % of spending and an even higher return, closing 22 % of their leads by serving as a vital hub for candidate information and due diligence.
The most powerful engine for growth isn’ t a sophisticated algorithm; it’ s a happy franchisee. Referral programs, which account for just 6 % of the budget, deliver a 30 % lead-to-close ratio, outperforming all other channels.
“ Referrals are the best thing that we can get from our franchise owners out there,” Courtney said.
“ Referrals are the best thing that we can get from our franchise owners out there.”
Other
Old-school tactics
For the second year running, the AFDR report looked at different ways franchisors reach prospective franchisees. Direct marketing, local events, and other forms of personalized, traditional outreach are yielding strong recruitment results.
Other Successful Recruitment Programs
3 %
0 10 20 30 40 50 Direct Marketing to Candidates Custom Local Events Community Outreach / Engagement Involvement in Associations Sponsored Content / Native Advertising Text Messaging Other
18 %
25 %
35 %
35 % 38 %
50 %
“ We are starting to see what we call,‘ what’ s old is new,’ or good old-fashioned franchise development,” Courtney said.
Phibbs tied the change to a broader cultural shift among consumers. She encouraged attendees to consider how past recruitment tactics may help propel a recruitment program’ s future success.
“ People like that personal touch, that interconnection,” Phibbs said.“ Those same philosophies apply to franchise development, and the number of people using them has basically doubled since last year.”
Respondents highlighted the following successful recruitment programs:
• Targeted, custom direct marketing to candidates( 50 %)
• Text messaging( 38 %)
• Involvement in associations( 35 %)
• Sponsored content( 35 %)
• Custom local events( 25 %)
• Community outreach / engagement( 18 %)
• Other( 3 %)
Issue 4, 2025 | Franchise Update | 39