Franchise Update Magazine Issue IV, 2016

BY EDDY GOLDBERG 2017AFDR IT’S BENCHMARKING TIME! R 167 BRANDS DELIVER ACTIONABLE RECRUITMENT DATA esults from the 2017 Annual Franchise Development Report (AFDR) were unveiled in late September at the 18th annual Franchise Leadership & Development Conference in Atlanta. The 2017 AFDR is based on responses from 16 7 franchisors representing 60,989 units (51,789 franchised and 9,200 company-owned). Participants in the survey consisted of franchisors that completed an online questionnaire. Responses were aggregated and analyzed to produce a detailed look into the recruitment and development practices, budgets, and strategies of a wide cross-section of franchisors. The data and accompanying commentary and analysis provide the basis of the 2017 AFDR. Highlights from the report were presented in a general session at the conference by Franchise Update Media CEO Therese Thilgen. Among her observations based on the AFDR data were: • Franchisees are getting younger. Are you prepared? • The two most important factors for development are franchisee validation and a strong sales process. 2017 ANNUAL FRANCHISE DEVELOPMENT REPORT PRODUCED BY 30 • Recruitment budgets were up in 2016. • Half of ad spending for recruitment is for digital. • Four in 10 brands still don’t track cost per lead or cost per sale. • 44 percent of food brands exceeded their goals in 2016. • International expansion for U.S. brands continues to grow. Growth plans for 2017 from the 167 respondents target a total of 6,536 additional franchise units, 1,966 through existing franchisees and 3,843 from new franchisees. For comparison, last year’s growth plans from 134 brands targeted a total of 6,442 additional units; and for 2015 those numbers were 6,063 total new units from 139 brands. Below are additional highlights from the 2017 AFDR. Ordering information can be found on page 33. • Recruitment budgets. Average budget plans for 2017 for franchise sales and recruitment (advertising and media expenses, not including brokers and employee compensation) among respondents was $181,510, with a median of $125,000. This is an increase from last year, when the corresponding numbers were $162,821 and $120,000. This could indicate more intense competition not only for quality candidates, but also higher internal costs stemming from salaries and commissions for the best salespeople. • Where the money goes. Planned allocation of respondents’ 2017 recruitment budgets remained essentially the same as in previous years, with some variation in print and trade show spending. At 49 percent, spending on digital continues to increase and is expected to continue growing and account for half or more of all recruitment spending next year as prospects’ use of mobile devices to explore franchise opportunities continues on its own growth trajectory. Spending on print has stabilized after a few years of decline, while budgeting for trade shows (17 percent) and public relations (13 percent) remained about level with 2016. Franchiseupdate ISS U E IV, 2 0 1 6 fu4_grow_afdr(30-33).indd 30 11/8/16 2:30 PM

Franchise Update Magazine Issue IV, 2016 | Page 32