2021 Annual Franchise Development Report – Time for Growth

Now that spring is in the air and vaccines in more people’s arms every week, we think it’s time to move from recovery to growth. That’s why we’re starting this series of highlights from the 2021 Annual Franchise Development Report (AFDR), beginning with an overview of the research, analysis, and methodology used in the report. Next time we’ll dig into recruitment budgets with a look at the changes over the past 8 years.

The results from the 2021 AFDR were unveiled last October at the first-ever Franchise Leadership & Growth Virtual Conference (FLGVC). New in this year’s report is survey data on the effects of the Covid-19 pandemic and new statistics on the changing role franchise brokers play in the development process. Because of Covid, the AFDR was combined with the Annual Franchise Marketing Report (AFMR) this year.

Participants in the survey consisted of franchisors that completed an in-depth 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 2021 AFDR/AFMR.

Highlights from the report were presented in a general session at the conference by Franchise Update Media’s EVP and Chief Content Officer Diane Phibbs and CEO Therese Thilgen. Below are selected highlights from their presentation. Ordering information is at the end of the article. Conference attendees received a complimentary copy.

The view from 30,000 feet

Introducing the report, Thilgen told attendees, who included franchise development teams, consumer marketers, and members of the C-suite: “Our goal is to provide data that will help you in your respective disciplines respond to the changes of 2020 and make more informed decisions going forward.”

She cited a Wall Street Journal article titled, “Is It Insane To Start a Business During Coronavirus? Millions of Americans Don’t Think So.” And although the pandemic had closed hundreds of thousands of businesses, on the other hand, said Thilgen, “We’re seeing a record number of applications being filed for new U.S. businesses, and they are rising at a rate not seen since 2007. Why? A mix of necessity and opportunity.”

In the franchise world, she said some good news was that the preceding months saw an uptick in franchise sales, multi-unit deals, and new unit openings in almost every category. That trend has only increased since October as the U.S. economy slowly recovers and rebounds.

Phibbs, who co-presented the findings, said the ways that franchise prospects research franchise opportunities today has changed even more from the onset of the pandemic. With so much information about a brand available online, prospects conduct most of their due diligence long before they pick up the phone and engage with a brand – and that initial research by potential franchisees is not only about the brand, its products or services, or ROI.

“When prospects look at a franchise opportunity, they also look at how a brand engages with its customers. They look at marketing programs, social media, PR, and visit or shop your brand themselves,” she said. “And they often talk with franchisees before they talk to you.” And since Covid arrived, they’re also looking at how brands adapted, the support for franchisees from the brand’s leadership team, and how much a brand pitched in to support their communities and first responders.

Three key factors revealed in the AFDR and mystery shopping this year were:

1) With so much initial research taking place on the Internet, it’s critical to position your franchise opportunity in the best possible light online. This matters more than ever during the pandemic. Your website must engage prospects and provide important details to invite them to take the next step.

2) Franchise development is a team sport. How each department interacts with franchisees and end customers is huge. It’s franchise development’s responsibility to get the executive team and their peers educated and invested in development.

3) Business conditions at the unit level are critical to franchise development. If your units/locations aren’t doing well, your ability to grow your system will be affected. There aren’t enough leads in the world to overcome unhappy franchisees and negative sales and profits.

Next time: Recruitment Budgets: 8-Year Trend

Ordering Information

As an additional bonus, the AFDR was combined with the Annual Franchise Marketing Report (AFMR) this year. The price for the combined report is $350. As noted, all conference attendees received a complimentary copy. Orders can be placed at https://afdr.afrm.franchiseupdate.com.