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The Cost of Acquiring Franchisees

What is your estimated sales and recruitment budget this year? To acquire franchisee leads, a franchise system will typically invest in print and online advertising, public relations strategies and trade show attendance. Money will be spent on print costs for collateral and possibly promotional items – everyone likes free stuff, right?

As a franchisor, however, you know that acquiring a franchisee goes beyond these marketing and advertising costs. Salaries must be paid to those employees who handle the lead intake as well as those who interview potential candidates. If you host a discovery day for those candidates who are very interested, but not yet confirmed, there is a cost there, too. Plus, you may also have to factor in commission upon closing a deal, either to a broker or a sales representative.

These costs add up. When you lose a franchisee due to underperformance, there is lost profit from the single franchise unit, but also a financial loss from the recruitment process.

So, how much do you invest in your franchise sales and recruitment process? How many leads do you receive from your current investment? What is your lead to deal ratio and turnover rate?

Improving the overall health of your franchise system starts at the beginning of the sales process – identifying and recruiting only those candidates that you believe will be top performers in your franchise business model. Knowing who your top performer is can help you better understand how and where to reach them with your marketing efforts. Not only will you better allocate your budget, but also your quality of lead will improve.

Considering your franchisee lead acquisition, onboarding, training and support costs, bringing on a new franchisee is an investment. Predicting the future success of your candidates can help you be a smarter, more educated investor.

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