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.
It should have. A brand that invests more in growth should grow. When effort and results stop tracking together, the instinct is to push harder on the same lever. The data says the lever itself has moved.
That contradiction is the story of the 2025 Franchise Sales Index, and the numbers say she is not alone.
The strongest brands in this dataset stopped trying to outspend each other on lead generation. They started getting more out of the leads, the franchisees, and the signed agreements they already had. The growth lever moved from the top of the funnel to the quality of execution underneath it.
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.
The brands that invested in conversion efficiency and franchisee engagement outgrew their peers every year. What changed in 2025 is that the size of the advantage got bigger.
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%.
Leads rose 7%. Conversions rose 97%.
That is the single most important number in this report, because it rewrites where growth comes from. The brands that grew did not buy their way there. They converted their way there.
The Gap Between Volume and Conversion
The improvement reflects real operational change: faster follow-up, sharper qualification, and a better candidate experience from first contact to signed agreement.
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: The Engagement-Growth Multiplier
Across 309 brands with complete engagement data, the brands that invested in field operations, franchisee training, and content platforms consistently outgrew the ones that did not.
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.
That is a different kind of return than most development budgets are built around. The investment in field visits, training, and content does not just support compliance. It compounds into demand. Customers using unified operational systems have seen an 18% increase in average unit economics, which is the kind of unit-level strength that turns existing franchisees into a growth engine rather than a maintenance cost.
The widening gap also tells you when engagement matters most. 2024 was a strong year for franchise development across the board, and low-engagement brands rode that market momentum to nearly keep pace, which is why the multiple compressed to 1.2 times. In 2025, conditions softened, and the brands that had not invested in engagement felt it. The gap widened back out to 1.9 times.
Engagement matters most when you cannot rely on the market to do the work for you.
Engagement is also a leading indicator, not a trailing one. The brands with strong engagement numbers today are the ones whose growth numbers will look good in next year’s report. We unpack the four signals that make up engagement, and how engaged franchisees become advocates, in a dedicated piece on the engagement multiplier.
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. Every one of them is revenue that has been sold but not yet realized.
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.
The brands that open more of that pipeline are not lucky. They are engaged. We cover how post-agreement support drives a 48% difference in opening rates in a separate analysis of the SBNO pipeline.
Where Leads Actually Get Lost
Most franchise leads die in silence, not in rejection.
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.
That decline is a direct fingerprint of process maturity. Brands are closing the gap between inquiry and first contact, and the data rewards them for it.
Consider what a single unresponsive lead actually costs. You lose the candidate. You lose the months of portal spend that delivered them.
You also lose the franchisee that candidate might have become, the unit they would have opened, and the referral that unit would have generated three years on. One slow follow-up does not cost one lead. It costs the compounding chain that lead would have started.
Decades of research on lead response timing point the same way: the faster the first contact, the better the odds of qualifying the lead. Speed-to-lead remains the cheapest conversion lever in franchise development, and most brands still leave it on the table.
Your Highest-Converting Lead Source Is Already in Your System
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%
Referrals from existing franchisees convert at 21 times the rate of internet leads.
This is where development and operations stop being separate departments. Franchisees who are well-supported and meeting brand standards refer better candidates and represent the brand positively in their markets.
The same engagement investment that drives operational performance also shapes the quality of your referral pipeline. The connection between how well you support current franchisees and how efficiently you grow is direct, and it shows in how the best brands maintain brand standards as they scale.
The Real Frontier: Profitability and Retention on the Units You Have
Read the three findings together and a single message emerges. The growth advantage in franchising is moving away from how many units you can add and toward how well the units you already have perform.
Better conversion produces better-fit franchisees. Better engagement produces more profitable, more loyal ones. Better post-agreement support turns signed agreements into open, revenue-generating locations.
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 brands pulling ahead are not the ones with the biggest budgets. They are the ones executing most consistently across conversion, engagement, and post-agreement support. That is a discipline question before it is a spending question, and it is the same discipline behind the shift from reactive to proactive operational management.
The chief development officer staring at her flat deal count does not need a bigger lead budget. She needs to convert better, engage deeper, and open faster. The 2025 Index says the brands that do are the ones that grow.
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.
Why did franchise conversion double while lead volume stayed flat?
Conversion roughly doubled because brands improved how they worked the leads they already had. The data points to faster follow-up, sharper qualification, and a better candidate experience. No-response losses, the single most common reason leads die, fell 30% over the three-year period, which reflects brands closing the gap between inquiry and first contact.
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.
Ian Walsh
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