What a franchise broker actually earns, from the one filing that has to say

If you are a franchisor budgeting a development year, you have a number for what a broker costs you: somewhere between eighteen and twenty-five thousand dollars per closed deal. It is in the trade press, in consultancy decks, in the blog posts that come up first, and in a great many internal spreadsheets.

We went looking for who measured it. Nobody did. It is not published by FranNet, FranChoice, IFPG, FranServe, Business Alliance or the Franchise Brokers Association on any page we could reach. It is illustrative arithmetic: forty to fifty per cent of a round $50,000 franchise fee, an example that got repeated until it became a benchmark. The cleanest trace we found for it is a lead portal.

Then we went looking for a figure somebody was actually obliged to state. There is exactly one, and finding it turned out to be an accident of how the rules are written.

Why the real number is almost never visible

A Franchise Disclosure Document is a long, legally mandated confession. It runs to twenty-three Items and it will tell a prospective franchisee about litigation, bankruptcy, fees, territory, renewal and termination. It does not have to tell them what the broker sitting across the table is being paid.

The FTC's own guidance on the amended Franchise Rule is explicit about this. A broker only has to be disclosed where it is a party to the franchise agreement with obligations that continue after the sale, which is precisely what a broker is designed not to have.

So no franchisor is compelled to print what it pays. No broker is compelled to tell a buyer what it earns from the brand it is recommending. The commission is a private number in a transaction that is otherwise disclosed down to the cent.

The exception, and it is a good one

There is one way the number becomes public. If a company franchises its own brokerage, then it is a franchisor, and it must file an FDD like anybody else. And if it chooses to make a financial performance representation about what its franchisees earn, Item 19 requires that representation to have written substantiation available on request.

FranNet, LLC franchises a franchise-brokerage business. Its 2026 FDD is on file with the Minnesota Department of Commerce, in a public database, and its Item 19 reports two columns for calendar year 2025. The first is defined by FranNet as the sum of all referral fees paid to FranNet by a franchisor. The second is the number of referrals that ended in a signed franchise agreement.

That is the numerator and the denominator of the exact question, filed with a state securities regulator.

Both columns are arithmetic means over the same 29 offices, so dividing one by the other is legitimate: it gives total fees over total deals, a pooled per-deal average rather than an average of ratios. $291,700 divided by 8 is roughly $36,500 per closed franchise deal.

One caveat has to be printed with that. The engagement counts are stated as whole numbers, so an 8 could be anything from 7.5 to 8.49. That puts the pooled figure in a band of roughly $34,300 to $38,900. The direction does not change.

And look at the bottom row. The low is not an average of anything: it is one office, one closed deal, $26,000 of commission. A single observed transaction, sitting above the top of the range the entire industry quotes.

Two sources with opposite incentives, agreeing

A broker network has every reason to make broker commissions look large. A franchisor paying them has every reason to report them small. So it is worth noting where the two land.

A broker network's sworn state filing and a survey of the franchisors who pay them land within about seven per cent of each other, at roughly $35,000. Neither lands anywhere near the number the industry budgets against. If you are planning a development year on $18,000 to $25,000 a deal, you are short by something like $12,000 per franchise sold.

The cost-per-franchisee figure has a footnote most people skip

The 90% close rate that is not a close rate

Franchise development content repeatedly cites a 90% close rate at the broker introduction stage, sourced to the 2024 Annual Franchise Development Report. We went and read the table.

It sits under the heading “Franchisors who used brokers tracked the following metrics”, with four rows: territory check to close 20%, lead to close 90%, applications to close 27%, discovery day to close 33%. Those are the percentages of broker-using franchisors who track each metric. They are not conversion rates.

The previous year's edition asks the same question in wording that cannot be misread, and reports lead-to-close tracking at 73%. A rise in tracking prevalence from 73% to 90% has been republished across the industry as a 90% close rate.

It also cannot be true. The same report's survey-wide leads-to-sales ratio is 1.8%, and the 2026 edition puts the overall close rate on broker-sourced deals at 16%. A channel does not convert nine leads in ten and sixteen in a hundred at the same time.

And the share of sales brokers actually source

You will see it said that brokers source 30%, or 50%, of all franchise sales. We found no primary source for either. The only recurring measurement we could reach is Franchise Update Media's, and it reports brokers accounting for 18% to 20% of deals across three consecutive years.

Even that carries a denominator worth stating: it is a share of deals reported by 120 to 128 self-selected franchisor brands, not a share of all franchise sales in the United States. Nobody publishes the total number of franchise agreements signed in the US in a year, so the denominator a true national percentage would need does not exist in public. Any claim of that shape is an estimate wearing a statistic's clothes.

Why the evidence is this thin, and what would fix it

A market with no disclosure requirement produces exactly the evidence base you would predict. Franchise Update Media, trying to report broker costs from its own survey, wrote that so few brands submitted cost information that it was unusable. It also found that 85% of brands using brokers did not track how brokered franchisees went on to perform.

California passed the fix. Senate Bill 919, signed in September 2024, defines a franchise broker to include the whole vocabulary the trade uses to avoid the word, naming broker networks, franchise sales organisations, consultants and coaches. It creates a Uniform Franchise Broker Disclosure Document that must be handed to a prospect before any conversation about an opportunity, and section 31527(g) requires it to state how the amount of any consideration the broker receives is calculated.

It is not in force. The statute makes implementation contingent on the Legislature appropriating money for it, and as of this month the California Department of Financial Protection and Innovation's own page still reads “Registration for Franchise Brokers Not Yet Operational.”

So almost two years after the only US law of its kind was signed, there is still no jurisdiction in the United States where a prospective franchisee is entitled to be told what their free advisor earns from the brand being recommended to them.

What we would do with this if we ran franchise development

We build lead capture and pipeline systems for franchise development teams, so we are in the same channel as most of the people publishing these numbers. That is exactly why there is no cost-per-franchisee figure anywhere else on this site, and why the franchise development pages carry a method rather than a benchmark.

The practical version, if you are a franchisor:

1. Rebudget the broker channel at what it measures, not what it is quoted at. Two independent sources say roughly $35,000 of success fee per closed deal, and total broker programme cost per sale is higher again.
2. Put broker commission inside your cost-per-franchisee, not beside it. The published $13,757 excludes it by the publisher's own admission, so a brokered deal and a direct deal are not being compared on the same basis in most development reviews.
3. Record the source of every deal at signature, not at first contact. The 18% to 20% figure exists because a survey asked; your own share is knowable exactly, and almost nobody can produce it from their CRM without a manual reconstruction.
4. Track what brokered franchisees do afterwards. 85% of brands using brokers do not, which means the channel is being judged on acquisition cost alone while the thing that actually matters goes unmeasured.
5. Ask the broker, in writing, how they are paid. No law currently requires an answer. That is precisely why the question is informative.

None of this says brokers are bad value. Twenty per cent of deals through a channel that costs about $35,000 a close may be an excellent trade, and for a brand without an in-house development team it often is. It says the industry is making that judgement against a number nobody measured, while the one number that was filed under penalty of perjury sits in a state database that almost nobody reads.