Annual Forecasting Tips for Franchise Development

Scott Ginsberg, Metric Collective

Is the big January bump just a myth? If your franchise brand is looking for a new source of franchisees ready to open one of your franchises, you need to start planning towards the end of the year so you can hit the ground running when the ball drops. Here are our recommendations.

1 – Start planning during winter months

When we take a look at the thousands of franchise sales processes that we’re a part of, by far the most commonly cited reason for potential franchisees to not continue the conversation is that it’s not the right time. Let’s face it. There are a lot of distractions in life and leads are always apt to retreat to those as a reason to not take action.

Seasonally, the winter has the fewest distractions by far. The days are short, and people spend a lot of time at home. Frankly, people are often looking for something to do! So why not become an entrepreneur?

The holidays mute the “winter effect” but by January, we see engagement with leads at its highest point.

This is the ideally time to get ahead of the bump and prepare your planning accordingly. Every time we look at interest in franchising over the course of the year from an online search perspective, you always see the greatest jump from the last week in December to the first week in January.

Opening a franchise is often times seen as a good way to fulfill a new year’s resolution. Want a new job? Want to secure financial security? Want to change your life in any way? Franchising is a great way to get it done. And your brand needs to capitalize on that.

2 – Set goals in a data driven way

Franchises are not great at actually forecasting the number of units that will be opened in a given year.
Particularly with the economic impact of the pandemic, every franchise brand is looking to award more units without increasing the development budget.

Marketing and sales are under pressure to deliver more despite ever-tightening resources. If franchisors can't change the development math soon, many careers, livelihoods, and entire franchise systems will be in jeopardy. They need to forecast their goals in a data driven way.

Starting by simplifying their financial decision making. Franchisors need to better forecast sales and visualize metrics to track goals accurately. And they need to set expectations for digital marketing results with practical and thoughtful planning.

If your brand hasn't succeeded with those approaches yet, now you have a chance to kick off the year with a clean slate.

3 – Think long term about brand growth

Franchisors must think long term and focus on the important, longer-lasting, financials of their franchise organization. This means crunching the numbers in a hyper focused way. We've been helping our clients do this for more than three decades, and we recommend a few strategies:

Rethink franchise unit value -- The old way of focusing on initial franchise fees creates a smash and grab goal. Franchise salespeople need numbers on the board, but company executives are thinking bigger and longer term. The here and now value is important, yes, but what about three to ten years from now? Now you can predict the expected new deal value over the average deal term including royalty collections and other metrics. Try our Franchise Unit Value Calculator to do so!

Be realistic about lead to deal -- It's hard to say how many leads turn into deals. Depending on your brand's details and industry average, your ROI will vary. We tell our clients to plug in their current or speculative lead flow to see how many deals can come from their sales efforts. If you want to forecast how many deals you can (realistically!) expect to close from online leads, try our Lead to Deal Calculator.

Avail yourself of tech partnerships -- Franchise Development professional need buy-in from the executive team tp move forward with tech that grows the organization. If you're doing a planning meeting at any time during the net year, make sure you're using a sophisticated lead generation engine can turbocharge your existing franchise website. Use our Tech Partnership ROI Calculator to make a compelling business case for your planning ideas.

Remember, the bigJanuary bump may not be a myth. If your franchise brand is looking for a new source of franchisees ready to open one of your franchises, you need to start planning towards the end of the year so you can hit the ground running when the ball drops. Calculate intelligently!

Do you spend time on outreach and closing deals, or doing math?

Use our toolkit, plug in your brand's financials and other relevant metrics to calculate the sales and marketing most appropriate for growth.