How Much Does Franchise Lead Generation Cost?
When trying to answer the question, “How Much Does Franchise Lead Generation Cost?”, there are a few things to consider. Some of the major considerations include:
- What Is Your Cost Per Lead?
- What Is Your Cost Per Sale?
- What Is Your Ad Spend?
- What Is Your Management Fee?
Let’s break down each of these questions.
Question #1: What Is Your Cost Per Lead?
Cost Per Lead (CPL) isn’t everything, but it is an important metric. Our all-time Cost Per Lead for franchise development leads is about $32 per lead. This is similar to what you might see from franchise portals, who usually charge about $30-$60 per lead.
The main thing that you want to avoid is a CPL that is above about $100. When you get into those kinds of numbers, it makes it incredibly difficult to have a low Cost Per Sale. We got calls constantly from franchisors that are trying to do franchise development lead generation on their own via Google and have a CPL that is between $250-$1,000 per lead. Most of this comes down to bad landing pages and bad keyword targeting. But, when your CPL is $500, you would have to close about 1 out of every 20 leads into actual franchisees for that to make sense, which is incredibly difficult to do with non-broker leads.
Question #2: What Is Your Cost Per Sale?
Cost Per Sale (CPS) is the second most important metric when it comes to franchise sales, only surpassed by # of franchise sales closed. When it comes to driving franchise sales via PPC (Google Ads + Meta / Facebook / Instagram Ads), your Cost Per Sale is probably going to be somewhere between about $5,000-$15,000 per sale. Most of our clients see about a $7,000-$12,000 Cost Per Sale.
If your franchise is outside of the normal $100,000-$750,000 range, sometimes your CPS can be higher than that $12,000-$15,000 range since not a lot of people have $1M-$10M on hand to invest in a new franchise opportunity.
It’s important to note that it usually costs between around $25,000-$40,000 per sale to sell a franchise via a Franchise Broker Network. So, in general selling franchises via PPC ads online is about 1/2-1/3 the cost of closing a deal via a Franchise Broker Network.
Question #3: What Is Your Ad Spend?
Generally speaking, you want to be spending somewhere between about $1,500-$6,000 / mo. on your franchise development lead generation efforts via PPC online mixed between Google and Meta Ads.
Once your online ads are producing sales well for you, typically you want to then go and hire 2-3 Franchise Broker Networks such as IFPG and Franserve to start bringing deals in for you as well.
If you have all of that working for you, you may wish to come back and add a little bit more to your PPC ads up to about $10,000 / mo. We do have some groups that spend between $20,000-$75,0o00 / mo. on their PPC ads, but they are the exception, not the rule.
Question #4: What Is Your Management Fee?
Management Fees are what you pay ad agencies like us to run and manage ads and landing pages for you. We usually charge between about $750-$1,000 / mo. depending on a variety of factors such as industry, sales volume, ad spend, etc.
What you want to avoid is paying management fees above about $2,000 / mo. unless you are spending more than about $15,000 / mo. on your ads.
Other Things To Consider Regarding Franchise Lead Generation Costs:
When embarking on a franchise journey, one of the pivotal aspects to consider is lead generation. This process involves attracting and converting someone who has shown interest in your franchise into a potential franchisee. But the million-dollar question that lingers in every franchisor’s mind is- how much does franchise lead generation cost? Let’s delve into this topic.
Understanding Franchise Lead Generation
Before discussing the cost, it’s important to understand what franchise lead generation entails. It involves various strategies to identify and attract potential franchisees. These strategies may include online advertising, franchise trade shows, public relations, referrals, and SEO optimized content on your website.
Factors Affecting the Cost of Franchise Lead Generation
The cost of franchise lead generation is not one-size-fits-all; it varies based on several factors. These include:
- Marketing Channels: The channels you opt for your marketing campaign are a major determinant of your costs. Traditional channels like print advertising or trade shows might cost more than online channels such as social media or email marketing.
- Agency Fees: If you decide to hire a marketing agency to handle your lead generation, the fees charged by the agency will be a part of your costs.
- Geographic Location: The location of your franchise also influences the cost. Marketing in a metropolitan city, for instance, may be more expensive than in a smaller town.
Now that we have a fair idea about the factors, let’s talk money.
Cost of Franchise Lead Generation
A recent survey by Franchise Update Media provided some valuable insights into franchise lead generation costs. According to the report, the average cost per lead for franchisors ranged from $30 to $100, with higher-end franchises reporting costs up to $200 per lead.
Before you gasp at these numbers, bear in mind that not every lead becomes a franchisee. The key lies in generating high-quality leads who are genuinely interested in your franchise and have the resources to invest. While these leads may cost more, they provide a higher return on investment.
If you would like to speak with us about potentially having us help drive quality franchise leads for your franchise please fill out our Contact Us form.
Entrepreneur with a focus on Lead Generation, Google Adwords, Bing Ads, and Conversion.