For more than 10 years, Annual Franchise Development Report (AFDR) researchers have surveyed franchisors about their lead generation and recruitment processes to keep franchisors updated on the best practices needed to drive growth with high-quality prospects.
In October, Franchise Update Media released key findings from the 2025 AFDR at the Franchise Leadership & Development Conference (FLDC) in Atlanta. Diane Phibbs, Franchise Update Media's chief content officer and EVP, and Paul Pickett, chief development officer and EVP of Wild Birds Unlimited, presented a high-level overview of the report.
Participating brands completed a comprehensive online questionnaire. Their responses were aggregated and analyzed to provide a guide for recruitment and development practices, budgets, spending allocations, and strategic approaches. The data and accompanying analysis formed the foundation for the 2025 AFDR.
A total of 128 brands participated in this year's survey, representing a broad cross section of sectors, including food, retail food, non-food retail, brick-and-mortar service, and service based on population and territory. Among those responding, 73% offered both multi-unit and single-franchise opportunities.
Franchise development has changed over the years, and the AFDR continues to evolve to help franchise leaders benchmark development and identify areas for future improvement. Survey updates include metrics on franchise development team salaries and responsibilities as well as a deep look into broker data and the role of franchise sales organizations (FSOs).
Franchise brands participating in this year's AFDR remain bullish, reporting plans to add 2,572 new franchise units in 2025 with 69% of the growth expected from new franchisees and the remaining 31% from existing franchise owners.
All conference attendees received a complimentary copy of the report, which can be ordered online at afdr.franchiseupdate.com. Continue reading for a sampling of the AFDR's new and notable findings.
Franchisors were surveyed about their recruitment budgets, focusing on development performance and advertising efforts.
Among brands with finalized 2025 budgets, 59% planned to increase spending on franchise development. On average, these franchisors expect to add 45 locations/units in 2025. The number was 43 in 2024.
"There's a 13% increase in budget, but the goals for the coming year are flat," Phibbs said. "Everybody's looking to spend more money to get the same number of leads."
Franchise development teams are growing both in size and roles to reach wider audiences, expand digital strategies, and recruit effectively. Traditional roles, such as sales, lead qualifiers, and administration, have been joined by specialists in marketing, real estate, construction, and design.
The average annual budget for franchise development employees, including salaries, benefits, and bonuses, is $575,150 with a median of $350,000. This is a substantial increase from the 2024 average of $263,409 and a median of $185,000.
The average annual media budget for franchise recruitment and sales -- excluding broker fees -- is $268,083, a slight increase from $263,409 in 2024.
Franchisors who use brokers plan to nearly double their broker budgets to an average of $157,740, up from $78,700 in 2024.
Overall, the average franchise budget in 2025, including salaries and marketing, is around $1.02 million ($1,019,869), up from $734,564 in 2024. The average franchise recruitment budget for 2025 for brands (not including brokers) is $862,129, up from $655,864.
Bottom line: Like most everything else, franchise development costs are on the rise across the board.
"It just takes a lot more money," Pickett said. "Things are more expensive. Inflation hits us, and we have so many more opportunities to reach candidates. We have to spread our money around."
Tracking ad spending and evaluating its effectiveness are crucial to any successful recruitment strategy. Franchisors are making progress in this area, but there's room to optimize marketing budgets, improve lead quality, and boost the overall efficiency of every franchise sales development program.
Many brands note that the percentage of their budget allocated to top ad categories is starting to align closely with the percentage of deals generated.
In 2024, recruitment media spending percentages break down as follows:
Phibbs encouraged franchise development teams to use this data to review and analyze their own budgets and deals -- and adjust accordingly.
"This is lead-to-close ratio on deals, and it doesn't account for number of units committed within those deals," Phibbs said. "This chart represents where the most deals come from against where and what percentage of the budget is being spent. Unlike the budget where we have numbers and percentages -- on the deals columns, we have percentages but no real numbers on deals closed."
Every budget is different. Franchise brands with a tailored marketing initiative and highly targeted approach may get more value from these efforts by efficiently attracting and inking multi-unit deals, Phibbs added.
With marketing spending continuing to dominate recruitment budgets, franchisors were asked to provide a breakdown by category and outcome.
Digital tools remain the top sales drivers with pay-per-click (PPC) advertising, SEO, social media advertising, and franchise portals generating the most leads and collectively resulting in the highest number of closed deals.
While multi-media marketing strategies can deliver results, assessing your leads, deals, and spending is important.
"Some marketing initiatives might not generate a high volume of leads but are more effective at getting prospects to close," Phibbs said. "Conversely, there are marketing initiatives that are effective at generating a lot of leads, but they don't have the same close ratio. So again, you're going to want to take this information and compare it to your information to see how effective your budget really is."
This year's ADFR took a close look at other ways franchisors reach prospective franchisees. Respondents highlighted the following successful recruitment programs: (SLIDE 4)
"What I think it tells us is that it's an orchestra rather than a soloist," Pickett said. "You've got to be out there on a lot of different platforms to bring in the number of leads that you need."
Looking at the big picture, both cost per lead and cost per sale are up, but many brands don't track this effectiveness:
Why does it matter? Measuring the costs of acquiring leads and securing sales is important for effective budget planning and tracking the success of franchise recruitment. You can't manage what you don't measure, so these metrics aren't just helpful; they are fundamental to achieving development goals.
The effectiveness and efficiency of a franchise development program can be evaluated at different stages by four key closing ratios: leads to sales, qualified leads to sales, applications to sales, and discovery days to sales.
Brands that use prequalification tools to screen leads generally reported better closing ratios than those that do not. Sales closing ratios reported by respondents in 2024 are as follows:
With an increase in targeted lead generation and market saturation, Pickett and Phibbs encouraged brands to adopt focused marketing strategies. A target audience review, audience segmentation research, and understanding the lifetime value of a franchisee can help ensure your franchise development program remains on track.
For the fifth consecutive year, the survey explored the role of brokers in franchise recruitment. We asked participants whether they use brokers, how much they spend, the results they've seen, and their plans for broker usage going forward.
This year, 44% of brands in the survey said they used brokers as part of their recruitment strategy with 77% reporting franchise broker leads successfully resulted in a sale in the past 12 months.
The average cost per broker lead was $212, and the average cost per broker sale was $48,903. In addition, the average broker success fee stood at $34,095 ($30,000 median). The average broker spend was $78,700 ($50,000 median), including fees for broker membership, marketing to generate leads for brokers, conference fees, and travel-related costs.
Looking ahead, 56% of brands are projecting to use brokers in 2025 and invest heavily in broker resources. Franchisors estimate average broker spend in 2025 will more than double to $157,741. Results are also affected by brand, sector, and franchise fees.
Only 38% of brands that used brokers report they track the long-term success rate of franchisees who joined through brokered deals.
"You should track how your franchisees are doing, not just track where they're coming from, but how they perform as they enter into and are a part of your brand," Pickett said, adding that it's important to understand the trends.
This year's research included basic questions on using FSOs in recruitment. The report revealed that the vast majority (80%) of franchisors collaborating with FSOs have annual contracts while the remaining 20% have opted for monthly agreements. Among those surveyed, 80% say their FSO takes the lead in closing sales.
For upcoming surveys, ADFR researchers plan to develop this information further and broaden the analysis of the role FSOs perform in franchise development.
Highlighting the tactics of franchise brands that surpass their recruitment goals can offer insight into what sales success looks like in today's franchise landscape.
The survey showed that 18% of respondents reported exceeding their franchise recruitment goals with 86% of these high performers indicating lead quality is up or stable. These successful franchisors are closing deals through multiple lead sources.
Of the franchisors who surpassed goals, 43% tracked their cost per lead, and 50% used brokers, up from 35% the previous year. Franchise brands that exceeded their goals reported that the following lead sources offered the highest leads-to-close ratios:
Additional strategies used by the "exceeders" may interest brands looking to expand their prospect pool. Among them:
The research also provided a nonbroker cost-per-sale comparison between franchisors beating their sales projections and the general survey population. Without including brokers, brands that exceeded their goals paid $134 per lead and $18,983 per sale. The overall results for study participants were $271 per lead and $13,757 for sale.
All franchise brands that use brokers report spending more money on generating leads from brokers compared to other marketing initiatives.
"That makes sense when you go back and look at the data -- it just costs more. It is what it is, but then you don't have to spend money in other places," Pickett said. "This is a decision that you make as a brand."