Franchise Update Magazine Issue II, 2012 | Page 46

Grow Market Lead

By KERRY PIPES

Close Doesn’t Count
in Closing

Sales highlights from the 2012 AFDR

T

% of
respondents

he 2012 Annual Franchise Development Report to look at is whether respondents were improving in their own
(AFDR) is a comprehensive guide to sales and lead eyes. For example, when asked if their average closing period
generation performance in franchise recruitment. The was longer, shorter, or the same as in previous years, about one
report drills down to industry categories, investment in six said it was shorter; nearly half said it was the same, and
levels, and recruitment budgets; provides data on marketing costs; about one in three said it was longer.
Chart 3 correlates investment levels with the median numreports the top-producing sales and lead sources; analyzes current and
historical industry growth trends; and reveals performance evalua- ber of weeks it took franchisors to close deals with qualified
tions of franchise websites and follow-ups to prospect inquiries. The prospects. For investment levels up to $500,000, there is no
data and analysis in this 150-page report can help you accelerate significant difference, with the median at 11 to 12 weeks. For
your system growth, increase selling performance, and make smart- investment levels above $500,000, however, closing times rise:
25 percent for invester, more cost-effective
Chart 1. From first contact with a franchise prospect, what is your
ments up to $1 miladvertising and mar- current average closing period?
lion, and 100 perketing decisions.
30
Number of weeks to close a deal
cent for investments
This issue we
20
above $1 million.
shine the light on
10
Chart 4 asks franfranchise system re0
3
5
7
9
11
13
15
17
19
21
23
25+
chisors how their avsponse. It turns out
erage closing times in 2011 compared with
the early bird really does catch the worm! Chart 2. In 2011, is your average
From the moment you make initial con- closing period longer, shorter, or the their performance in preceding years.
Roughly one third said longer, about half
tact with a prospect, how quickly does your same as previous years?
said the same, and a minority (12 to 25
brand close the deal with qualified candi- Longer
34.0%
17.5%
percent) said shorter. Although results
dates—and how does that compare with Shorter
Same
48.5%
here seem mixed, one pattern emerges
other franchisors in your line of business?
across all investment levels: more brands
Consider the following survey responses Chart 3. From first contact with a
reported their 2011 closing times as “lonfrom more than 110 franchisors representing franchise prospect, what is your
ger” than “shorter.”
109,936 units (79,254 franchised and 30,682 current average closing period?
company-owned). Almost one in five (19.8 Investment Level
Median (weeks)
12
Next year’s AFDR
percent) said their average closing period Less than $50,000
$50,000 – $100,000
11
We continually seek ways to further raise
was 12 weeks; one in 10 (9.4 percent) said $100,001 – $250,000
12
franchisor awareness of development stansix weeks, and another 10 percent (9.4 per- $250,001 – $500,000
12
16
dards, and to create additional benchmarks
cent) said 16 weeks. For about one in seven $500,001 – $1,000,000
More than $1,000,000
24
to help speed the adoption of best practices
(14.6 percent), average closing period was
in franchise recruitment. We wel25 weeks or more.
Chart 4. In 2011, is your average closing period
come your comments—and particiHowever, comparing closing times longer, shorter, or the same as previous years?
Longer
Shorter
Same
pation—to help us shape the 2013
for different types of concepts is not Investment Level
Less than $50,000
30
0
70
report. To participate in next year’s
an apples-to-apples exercise. Some
$50,000 – $100,000
33
24
43
AFDR, contact Therese Thilgen
concepts are simpler and less expensive $100,001 – $250,000
38
25
38
at thereset@franchiseupdatemedia.
to start up and operate, while others $250,001 – $500,000
38
12
50
33
25
42
com. All data are aggregated and
require months of site selection and $500,001 – $1,000,000
More than $1,000,000
25
17
58
kept confidential. n
construction. An important number

44

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