I was asked this question by a franchisor recently and spent quite a bit of time carrying out analysis to answer this and thought it would be useful to share this with others…
The question of how many franchisors a serious lead looks at, and what percentage of franchise enquiries actually end up buying a franchise is impossible to answer that accurately but this is my take based on my 10 years experience and dealing with franchise portals and many brands:
Serious leads I categorise as leads that eventually end up buying a franchise, and in my experience these leads will start out enquiring about between 10 and 15 brands and then narrow it down to an average of 3 brands who they’ll concentrate their due diligence on, leading to them attending at least 2 meetings before making a decision.
Based on the total number of unique enquiries generated for franchising each year which I estimated to be between 10,000 and 12,000 in 2011, and the number of people signing franchise agreements estimated to be between 700-1,000 in 2011, then the percentage of franchise enquiries leading to franchisees will lie somewhere between 7% and 10%. Therefore out of every 100 franchise leads generated, only 7-10 will end up actually investing in a franchise and are therefore classed as ‘serious’ leads.
What this means for any brand is that for every ‘serious’ lead who attends a meeting, they are, on average, choosing between you and 1 or 2 others and you can get a good idea from your meeting-franchisee ratio how many you lose to their other options (a good conversion figure would be 1 out of 3/4 people you meet will join you).
This is why it is common that the best brands are only converting 5% of enquiries they receive into franchisees. Any brand achieving between 7-10% conversion from enquiries to franchisees is doing very well.
Of course there are some leads who show great intent, attend a lot of meetings, but never actually end up investing in a franchise, and these are the worst kind of leads to deal with as they take up a huge amount of time, potentially would like a franchise, but never actually follow through. These are hard to identify early in the process, because many of these leads personally believe they will buy a franchise at some point, but never do!