Franchise Broker Leads - What You Need to Know
One of the most common questions asked by people exploring the franchise consultant business is “where do I get leads?”. This is a valid question as without prospects there is no business. Good leads are critical yet can be a tricky aspect to the industry. Like many industries, the franchise broker leads space is full sources that over promise and under deliver. Leads can be purchased through the various franchise portals, third party leads aggregators and of course many of the broker groups themselves… All at a tidy profit of course. In fact, some broker networks consider their leads programs to be one of their most important profit centers. If you have explored any of the franchise broker opportunities chances are you receive the occasional email announcing some big deal one of their brokers recently closed and chances are in that email is some subtle comment saying, “and they did it with our amazing leads!”.
Before we explain more let’s make one thing clear… One of the most common denominators among the most successful franchise brokers is they handle their own marketing and tend to avoid buying other sources’ leads. If you intend to become a franchise consultant you need to know this!
How are franchise broker leads generated? In most cases they are purchased from one of the many franchise directories at a wholesale rate and sold at a retail rate. While there are other twists that is still the most common practice. Depending on which leads service you use, leads can range from $30 per lead to over $100 per lead. What determines the price can be a factor of whether or not the lead has been pre-screened (those are called “call verified leads” ) as well as how much a lead has to invest.
As a new consultant you will probably be contacted by all sorts of leads programs trying to sell you their leads. Before you buy ask yourself this simple question… If the leads are so great why are they for sale? I mean why would someone sell a lead that has the potential of generating a $25,000 commission for $50? A common answer is “because we don’t broker deals, we generate leads”. Fine… Then why not generate the leads and cut a deal with a few very successful franchise brokers for a share in the commission? With a little common sense the answer is fairly clear.
Common tactics used by most leads services are they may sell the lead to multiple brokers, they commonly recycle leads so you may think you are getting a fresh hot lead but it was actually an inquiry that came in 6-12 months ago or the lead source may take it upon themselves to assume if a lead inquired about a particular franchise brand they must also be interested in other similar brands. People who inquire about a Subway are probably also interested in a Quizno’s, Firehouse Subs or Jimmy Johns right?
Now don’t get me wrong, there are plenty of deals to be had in these types of leads but they are somewhat like scratching lotto tickets. The only one guaranteed to win is the house! The average contact rate for these types of leads is about 15%-20%, average cost is about $50 per lead and average number of leads to do a deal is about 200. FranServe, the second largest broker network in the industry claims right on their FAQ that is you want to do 1 deal per month you should be buying 150 leads per month. That’s a lot of money and a lot of voicemails!
Some broker groups don’t sell leads at all. They expect their brokers to generate their own leads and just pass them out to their brokers. Success Franchise Advisors is fairly unique in their program in that they don’t sell leads. They have a strong in house marketing program that generates quality leads which they also teach their brokers how to replicate and for pennies on the dollar compared to what most brokers spend on their leads. The leads they generate in house they give to an advisor and just take a healthy cut of the commission generated should it produce a deal. Founder and CEO of Success Franchise Advisors, Marc Stephens says, “we make money with our advisors, not off of our advisors which is what makes us such a productive team. We use a wide range of marketing methods yet avoid the traditional portal leads that most brokers are chasing.”. Legend has it they have a 19 year old advisor with a $100 a month marketing budget that averages a deal a month!
Bottom line is like many industries, the leads space for franchise brokers can be a slippery slope. If you become a franchise consultant it’s fine to start with the in house leads programs if you choose but if you want to really be successful it is imperative that you learn to properly market your business and cut out the middleman as soon as you can!