Key Takeaways
- Across 460+ brands and three years of data, lead volume grew just 7% while lead-to-agreement conversion nearly doubled, from 0.76% in 2023 to 1.50% in 2025. Growth came from conversion, not spend.
- High-engagement brands produced 1.9 times the net unit growth of low-engagement brands in 2025, up from 1.2 times a year earlier.
- 8,379 units enter 2026 already sold but not opened. How brands manage that pipeline decides what actually opens.
- Referrals from existing franchisees convert at 21 times the rate of internet leads.
- The fastest-growing brands are not the ones with the biggest development budgets. They are the ones executing most consistently across conversion, engagement, and post-agreement support.
Three Years of Data, One Pattern: Execution Beats Expansion
The chief development officer at a 60-location brand opens the 2026 planning deck and sees the contradiction she has been trying to explain to her board. Lead spend is up. The pipeline looks full. The deal count barely moved.
She has done what the old playbook said to do. More portals, more broker relationships, more money at the top of the funnel.
The funnel got wider and the brand did not get bigger.
What she feels is harder to put in the deck. The board will read the flat number as a development problem, and the development problem will read as hers.
She spent the money. She ran the plays. The scoreboard did not move.
When additional growth investment does not produce the expected result, the useful question is where the constraint sits: lead volume, conversion, qualification, openings, unit performance or another part of the lifecycle. The Index helps benchmark those stages, but it does not prescribe one universal growth lever.
That contradiction is the story of the 2025 Franchise Sales Index, and the numbers say she is not alone.
The dataset shows that conversion efficiency improved much faster than lead volume, that higher-engagement brands had higher net unit growth, and that thousands of signed units remained in the pre-open pipeline. Together, those patterns make execution across the franchise lifecycle worth measuring alongside top-of-funnel acquisition.
What the 2025 Franchise Sales Index Measures
The Index is FranConnect’s annual benchmark for franchise development. It tracks how development teams convert leads, engage franchisees, and manage their pipeline from first inquiry to open unit.
This edition draws on three full years of behavioral data, 2023 through 2025. The scope:
- 460+ franchise brands across Enterprise, Mid-Market, and SMB segments
- Approximately 3.4 million leads
- More than 33,000 signed franchise agreements
- More than 178,000 locations across eight verticals
It is the largest behavioral dataset in franchise development.
Why Behavioral Data Beats Survey Data
These numbers are not survey responses. Nobody self-reported how fast they follow up or how engaged their franchisees feel.
The figures are pulled directly from platform activity: real leads, real follow-up timing, real training completion, real opening dates. That distinction matters. Survey data tells you what teams believe they do. Behavioral data tells you what they actually did.
Set against the broader franchise sector tracked by the International Franchise Association, it is the deepest behavioral view of development activity available.
When the behavior of 460+ brands points in the same direction for three straight years, that is a pattern worth planning around.
The Three-Year View
The 2025 edition is the first to put three full years of behavioral data side by side. The progression is the argument:
- Lead volume: 991,000 (2023), 1,027,000 (2024), 1,062,000 (2025)
- Lead-to-agreement conversion: 0.76% (2023), 0.96% (2024), 1.50% (2025)
- Engagement gap, high versus low: 1.8 times (2023), 1.2 times (2024), 1.9 times (2025)
Lead volume grew at a modest pace. Conversion roughly doubled. The engagement gap narrowed briefly in 2024, then widened in 2025 to its highest level in three years.
Across the Index, brands with stronger conversion efficiency and higher franchisee-engagement measures also showed stronger growth outcomes than comparison groups. The relationship is useful for benchmarking, but the aggregate data does not establish that investment in either area caused the growth difference.
Finding One: Better Conversion, Not More Leads
From 2023 to 2025, total leads in the dataset grew by 7%. Over the same period, lead-to-agreement conversion went from 0.76% to 1.50%.
Lead volume rose 7%. The lead-to-agreement conversion rate increased from 0.76% to 1.50%—a relative increase of about 97% in the rate.
That difference matters because conversion efficiency improved much faster than lead volume during the period. The aggregate Index shows the pattern, but it does not establish that one specific change or investment caused it.
The Gap Between Volume and Conversion
Several operating factors can influence conversion, including follow-up speed, qualification, candidate experience, source mix and sales execution. The Index should be used to investigate those factors rather than attribute the aggregate change to any one of them.
Conversion still varies widely by vertical. QSR converts at 2.81% against a 1.50% baseline, while full-service restaurants sit at 0.44%.
The direction of travel matters more than the absolute figure. Brands that moved the number worked the funnel differently rather than funding it harder.
We dig into the mechanics of that shift, including where leads die and how speed-to-lead changes the math, in a companion analysis on franchise lead conversion.
Finding Two: Engagement and Growth Moved Together in the Benchmark
Across 309 brands with complete engagement data, brands with higher engagement measures also showed stronger growth outcomes than the lower-engagement comparison group. The Index uses activity across areas such as field operations, franchisee training and content platforms as engagement signals, but the observed relationship does not establish that investment in those activities caused the growth difference.
That pattern held in 2023. It held in 2024. In 2025, it got stronger.
High-engagement brands produced 1.9 times the net unit growth of low-engagement brands. A year earlier, that multiple was 1.2 times.
The gap is widening, not closing.
What a 1.9x Multiple Means in Practice
A high-engagement brand targeting 100 net new units produces the same output as a low-engagement brand targeting 190.
The 1.9x difference is an observed relationship in the 2025 dataset, not a guaranteed return from field visits, training or content. FranConnect customer data separately shows an 18% increase in average unit economics among customers using unified operational systems; that first-party customer-performance measure is distinct from the Franchise Sales Index benchmark and should not be treated as proof that engagement alone caused the outcome.
The widening gap is a reason to examine engagement alongside market conditions, not evidence that engagement alone explains the difference. In stronger development environments, external demand can affect multiple groups at once; comparing engagement, conversion, openings and market context over time helps separate those signals.
Engagement is therefore most useful as one operating signal among several when leaders are trying to understand differences in network performance, particularly when external market conditions are changing.
Engagement can also serve as an operating signal. In this dataset, higher-engagement brands had higher net unit growth, but the relationship does not establish that engagement alone caused the growth or predict what an individual brand will achieve next year.
Finding Three: The SBNO Pipeline Nobody Manages
SBNO stands for sold but not opened: units where a franchise agreement is signed but the location has not yet opened.
Across the dataset, 8,379 units enter 2026 already in the SBNO pipeline. These are signed commitments that have not yet become operating locations; their eventual revenue contribution depends on whether and when they open.
Why SBNO Concentration Hits Small Brands Hardest
The pipeline looks very different depending on brand size. Enterprise brands carry the most units in absolute terms, but the concentration runs the other way:
- Enterprise (300+ units): 5,564 units in pipeline, 3.8% of active system
- Mid-Market (75 to 300 units): 1,948 units, 7.7% of active system
- SMB (under 75 units): 867 units, 13.3% of active system
For an enterprise brand, 3.8% in pre-open status is manageable. For an SMB brand, 13.3% means a meaningful share of projected growth is sitting in limbo, waiting on build-out, permitting, training, or franchisee readiness.
Opening performance can be influenced by post-agreement support, permitting, real estate, financing, construction, training and franchisee readiness. A separate SBNO analysis examines the observed differences in opening outcomes without treating engagement as the sole cause.
Where Leads Actually Get Lost
Non-response is the largest closed-lost category in the Index, ahead of active rejection reasons such as not interested or financial disqualification.
Ranked by relative volume, the top reasons leads are closed and lost are:
- Unresponsive: the lead responded once, was never reached, or stopped responding
- Not interested: active disqualification by the candidate
- Financial qualification: not financially qualified, or financing unavailable
- Territory unavailable: no open territory in the candidate’s market
- Bad contact information
Here is the encouraging part. No-response losses fell 30% from 2023 to 2025.
The 30% decline is measurable in the Index, but the aggregate data does not identify a single cause. Teams can use their own response-time, contact-attempt and disposition data to investigate what changed.
Consider what a single unresponsive lead actually costs. You lose the candidate. You lose the months of portal spend that delivered them.
Slow or missed follow-up can carry opportunity cost beyond a single lead if a qualified candidate disengages before the brand has a meaningful conversation. The size of that cost varies by candidate, source and development process, so teams should measure their own response-time and disposition data rather than assume every delayed response represents a lost agreement, future unit or referral.
Lead-response research generally supports prompt first contact, but there is no universal response-time threshold that guarantees qualification or conversion. Speed-to-lead is best treated as a measurable operating lever alongside lead quality, qualification, routing and sales capacity.
Internal Network Leads Had the Highest Conversion Rate in the 2025 Benchmark
When you rank lead sources by conversion rate, the order surprises most development teams.
- Internal network (existing franchisees, referrals, development prospecting): 18.9%
- Trade show: 13.5%
- Brokers: 3.9%
- Internet: 0.9%
- Franchise website: 0.6%
Internal Network leads converted at 18.9% in the 2025 benchmark versus 0.9% for Internet leads. Internal Network includes existing franchisees, referrals and development prospecting, so the Index does not provide a standalone franchisee-referral conversion rate.
This is where development and operations become connected. Franchisee support, brand experience and operating performance can influence how existing operators talk about the brand and whether they participate in referrals, but the Index does not isolate those factors or provide a standalone franchisee-referral conversion rate.
Franchisee support and engagement can influence advocacy and referral activity, but the Index does not isolate that relationship or provide a standalone franchisee-referral conversion rate. Development teams should measure referral source, candidate quality and conversion directly rather than infer them from the broader Internal Network category.
The Real Frontier: Profitability and Retention on the Units You Have
Read together, the findings show why franchise growth should be evaluated across more than unit additions alone. Conversion efficiency, existing-unit performance, franchisee engagement and post-agreement opening execution provide different views of network health, and the Index does not establish one of them as the universal driver of growth.
Read together, the findings highlight three areas worth managing closely: conversion efficiency, franchisee engagement and post-agreement opening execution. Each is associated with important growth outcomes in the dataset, while the results of an individual brand still depend on multiple operational, financial and market factors.
None of that is a top-of-funnel story. It is a unit-level story.
From Adding Units to Strengthening Units
For a development leader, the shift changes what a strong year looks like:
- Growth is measured by units that open and perform, not just agreements that get signed
- The development budget is judged on conversion quality and franchisee fit, not lead volume
- Operations and development share one scoreboard, because referrals and openings live at the intersection
What This Means for 2026 Planning
The Index shows meaningful differences across conversion, engagement and post-agreement execution. Those patterns give brands useful benchmarks for examining their own operating discipline, but they do not establish that budget size or any single execution practice explains which brands grow faster.
For a development leader facing a flat deal count, the Index supports looking beyond lead volume alone. Conversion, engagement and opening execution are measurable parts of the lifecycle that can be benchmarked and investigated alongside acquisition spend, market conditions, unit economics and other growth constraints.
Frequently Asked Questions
What is the Franchise Sales Index?
The Franchise Sales Index is FranConnect’s annual benchmark for franchise development. It tracks how development teams convert leads, engage franchisees, and manage their pipeline. The 2025 edition draws on three full years of behavioral data, 2023 through 2025, across 460+ franchise brands, approximately 3.4 million leads, and more than 33,000 signed agreements.
What is a good franchise lead-to-agreement conversion rate in 2025?
The 2025 industry baseline in the Index is 1.50%, up from 0.76% in 2023. Conversion varies significantly by vertical: QSR leads at 2.81%, while full-service restaurants sit at 0.44%. The most useful benchmark is your own vertical’s rate, not the overall average, because consumer demand, capital accessibility, and operator pool depth all shape the number.
What changed as franchise conversion increased from 2023 to 2025?
The lead-to-agreement conversion rate increased from 0.76% in 2023 to 1.50% in 2025 while lead volume rose more modestly. Faster follow-up, qualification, candidate experience, source mix and sales execution are factors teams can investigate, but the aggregate Index does not establish which factor caused the increase.
What does SBNO mean in franchising?
SBNO stands for sold but not opened. It refers to units where a franchise agreement has been signed but the location has not yet opened. Across the 2025 dataset, 8,379 units enter 2026 in the SBNO pipeline. The pipeline is most concentrated at smaller brands, where 13.3% of the active system is pre-open, compared with 3.8% at enterprise brands.
