FDD Talk: How Much Does a Goosehead Insurance Franchise Make (Average Revenues and/or Profits)?

In this FDD Talk post, you’ll learn the following:

• Section I – Background information on the Goosehead Insurance franchise opportunity, including relevant news updates

• Section II – Estimated initial investment for a Goosehead Insurance franchise, based on Item 7 of the company’s 2021 FDD

• Section III – Initial franchise fee, royalty fee, marketing fee, and other fees for a Goosehead Insurance franchise, based on Items 5 and 6 of the company’s 2021 FDD

• Section IV – Number of franchised and company-owned Goosehead Insurance outlets at the start of the year and the end of the year for 2018, 2019, and 2020, based on Item 20 of the company’s 2021 FDD

• Section V – Presentation and analysis of Goosehead Insurance’s financial performance representations, based on Item 19 of the company’s 2021 FDD, including information on the:

• 2020 average gross revenue and premium for the 713 franchise producers, representing 529 Goosehead Insurance franchised businesses, who were included in the charts because (a) they operated during Goosehead Insurance’s entire 2020 fiscal year (January 1, 2020 to December 31, 2020), (b) had a start date on or before January 1, 2020 and were still operating as of February 5, 2021, (c) worked for a franchisee that was, during that period, in compliance with, and not in default of, the franchise agreement, and (d) had a role where a majority of their time was dedicated to new business production, grouped by tenure (1 year, 2 years, and 3+ years)

• 2020 average gross revenue and premium for the 158 TWG producers who were included in the charts because (a) they operated during Goosehead Insurance’s entire 2020 fiscal year (January 1, 2020 to December 31, 2020), (b) had a start date on or before January 1, 2020 and were still employed as of December 31, 2020, and (c) had a role where a majority of their time was dedicated to new business production, grouped by tenure (1 year, 2 years, and 3+ years)

Section I – Background Information

18 Things You Need to Know About the Goosehead Insurance Franchise

Strengthens Senior Management Team with New Additions and Promotions

1.  In early February 2021, Goosehead Insurance announced new management additions and managing director promotions, investing in management depth and recognizing the strength and contributions of existing leadership to support future growth.

2.  Ann Challis has joined the Goosehead Insurance team as its chief marketing officer. As CMO, Challis will develop an enterprise-wide marketing function with responsibilities to include all brand strategy, sales channel enablement, and the launch of a digital engagement platform. Challis joins Goosehead with 25 years in financial services marketing and extensive expertise in digital growth and performance marketing. She previously led marketing as a senior vice president at Elevate and prior to that held marketing leadership roles at Credible, Blackrock, and Wells Fargo Bank.

3.  Erin Baima has been promoted to managing director. Baima joined the team in 2010 and under her leadership, the risk management team has scaled tremendously while continuing to reduce the company’s E&O exposure and enhancing the company’s carrier relationships. Baima is a Chartered Property & Casualty Underwriter (“CPCU”) and is also a council member of the Goosehead Women’s Professional Development program.

4.  Mitchell Stella has been promoted to managing director. Stella joined Goosehead in 2010 and led its 2014 expansion in Austin, TX, growing the office from 5 sales agents to 50, while also focusing on successfully growing and mentoring its Central Texas franchisees’ performance. He is also heavily involved in Goosehead’s campus college recruiting efforts in Texas.

5.  Marisa Wagner has been promoted to managing director. Wagner joined Goosehead’s service team in 2013 and after being promoted to manager in 2016, she led Goosehead’s efforts to build out a robust and scalable training program. Her focus in recent years has been on managing the agent support team, which assists both corporate and franchise agents. Wagner is also heavily involved in the leadership of the company’s Women’s Professional Development program.

6.  Drew Rogas has been promoted to managing director. Rogas joined Goosehead in 2014 and quickly proved to be a talented sales agent, earning Rookie Producer of the Year (2014) and President’s Club (2017) distinctions. In 2017, Rogas led the expansion of Goosehead’s second Houston-area office in The Woodlands, TX and has grown their agent count from 12 to 40.

7.  Nathan Roberts has joined the Goosehead Insurance team as managing director and senior legal counsel. Roberts brings years of experience in corporate governance, securities, and corporate commercial work from his time as a partner at Dentons, a large global law firm. Roberts will be an important member of Goosehead’s growing legal team and will help support all aspects of the company’s compliance efforts.

8.  Michael Colby, president and COO of Goosehead Insurance, said, “We have a differentiated and innovative business model that delivers a superior client experience. The addition of Ann Challis to the Executive team will strengthen our marketing and digital efforts to further enhance our already significant growth runway. Additionally, we could not be prouder of the new Managing Directors’ significant career milestones. These individuals started their careers at Goosehead and have proven their value through years of hard work and dedication in delivering for our clients, agents, and partners.”

Launches Digital Agent Platform

9.  In mid-August 2021, Goosehead Insurance announced the launch of its Digital Agent Platform, a direct-to-consumer insurance quoting platform. Through artificial intelligence and deep, integrated technology, the Digital Agent Platform provides a best-in-class way for consumers to shop for and buy personal insurance – accounting for both the right coverage and the right price.

10.  The platform targets the pain points and challenges consumers face and flips the insurance model on its head by providing a simple, transparent, and efficient way to get insurance quotes. With as little as three data points – name, address, and date of birth – the proprietary tool will arm consumers with accurate home and auto quotes from a variety of A-rated insurance carriers in less than two minutes while maintaining all the benefits a knowledgeable agent brings to the process.

11.  According to Mark E. Jones, chairman and CEO of Goosehead Insurance, “Our Digital Agent Platform is completely unique in the market. Prior to the release of our new tool, the online insurance shopping experience was broken – it was impossible to find an online insurance shopping tool that leveraged the accumulated experience of professional agents and provided a choice product offering without sacrificing clients’ data privacy and taking a lot of time. We strongly encourage people to try the competitive platforms and then try ours. They will be amazed.”

12.  “Our Digital Agent Platform will transform not only what consumers can expect out of their insurance shopping experience – providing ease, transparency, control and accuracy – but also ensure our clients have the right coverage at the right price to better protect themselves. And, in stark contrast to other platforms, we never sell their information,” assured Jones.

13.  The Digital Agent Platform, which is now available across the U.S., is powered by key data integrations that automatically populate information about consumers’ homes and vehicles in the quoting process. The tool combines millions of data points from a long history of Goosehead expert agents’ quoting decisions and accumulated experiences over the past two decades. This form of agent-driven machine learning includes hyper localized data.

14.  Lastly, Goosehead’s deep carrier integrations allow the company to run accurate, real-time quotes – providing a better range of product than other tools on the market. Once quotes are generated, users are then connected to a Goosehead agent who can provide further details on the options available, discuss special considerations based on their unique needs, and provide continuous support throughout the insurance buying process and throughout the client’s lifetime.

15.  Kendall Keil, an agency owner through Goosehead, said, “As an insurance agent, my top priority is making sure my clients are getting the right coverage. The Digital Agent Platform helps enormously by delivering recommended policies in a fast and accurate way. That means when I speak with clients, they’ve already seen all of their options presented clearly, and we can have an even more informed discussion based on their individual situations. The Digital Agent complements my work, helps simplify the experience and increases transparency for my clients.”

Company History

16.  Goosehead Insurance was founded in 2003 by Robyn Jones, a real estate investor, and her husband Mark Jones, who was a senior partner at Bain & Co. at the time. The Joneses set out to start a different kind of insurance agency, one that put clients first and focused on providing the best service.

17.  The Joneses started franchising Goosehead Insurance, which was initially called TWG Insurance, in 2011. The company consolidated its corporate and franchise operations under the Goosehead name in 2014. Over the next few years, Goosehead Insurance grew quickly around the U.S. and there were nearly 300 locations by 2018. Today, there are Goosehead Insurance franchises all around the U.S.

Entrepreneur’s Franchise 500

18.  Goosehead Insurance ranked No. 62 on Entrepreneur’s 2021 Franchise 500 list.

Section II – Estimated Costs

• Detailed estimates of Goosehead Insurance franchise costs, based on Item 7 of the company’s 2021 FDD.

Section III – Initial Franchise Fee, Royalty Fee, Marketing Fee, and Other Fees

• Detailed information on Goosehead Insurance’s initial franchise fee, royalty fee, marketing fee, and other fees, based on Items 5 and 6 of the company’s 2021 FDD.

Section IV – Number of Franchised and Company-Owned Outlets

Franchised

2018

• Outlets at the Start of the Year:  292
• Outlets at the End of the Year:  457
• Net Change:  +165

2019

• Outlets at the Start of the Year:  457
• Outlets at the End of the Year:  614
• Net Change:  +157

2020

• Outlets at the Start of the Year:  614
• Outlets at the End of the Year:  891
• Net Change:  +277

Company-Owned

2018

• Outlets at the Start of the Year:  0
• Outlets at the End of the Year:  0
• Net Change:  0

2019

• Outlets at the Start of the Year:  0
• Outlets at the End of the Year:  0
• Net Change:  0

2020

• Outlets at the Start of the Year:  0
• Outlets at the End of the Year:  0
• Net Change:  0

Section V – Financial Performance Representations (Item 19, 2021 FDD) and Analysis

• Below Goosehead Insurance provides historical performance of its franchisees and “producers” of its franchisees during its fiscal year ended December 31, 2020.

• The franchisor’s affiliate, TWG, engages in the insurance services business under the name “Goosehead Insurance” and using the Proprietary Marks. TWG has been operating as a national independent insurance agency since 2003. The company has offices in Westlake, Texas; Irving, Texas; Ft. Worth, Texas; Houston, Texas; The Woodlands, Texas; Austin, Texas; and Rosemont, Illinois.

• A “producer” for the purposes of this Item 19 is an individual who works for a franchisee as an agent or for TWG as an employee and has devoted full-time efforts to a production role as of December 31, 2020.

• Except as identified below, all franchisees and TWG agents that were in operation for at least one full year as of December 31, 2020, are included.

• Two types of information are provided below, the average gross revenues per producer and the value of premiums generated per producer.

• Differences in state laws (for example, some states – like California and Florida – do not allow for the payment of “agency fees” whereas fees are allowed in Texas and Illinois) may negatively affect the results of franchisees and/or producers in certain states.

• The data used to compile the information in this Item 19 is derived from agency fees and sales commissions paid directly to Goosehead Insurance.

• “Gross Revenue” means the amount of Commissions and Agency Fees, net of reversals of Commissions for policy cancellations or policy changes and net of Agency Fee refunds, for insurance services provided by the Franchised Business.

• Gross Revenue does not include any Premiums or Policy Fees collected by the Franchised Business on behalf of any insurance carrier.

• The Gross Revenue noted in this Item 19 are the total Gross Revenues paid, on a cash basis, by Goosehead Insurance’s carriers to it and recognized during the 2020 fiscal year (January 1, 2020 to December 31, 2020).

• “Premium” is paid by a client to the insurance carrier for insurance coverage. The Premiums noted in this Item 19 are the Premiums from Goosehead Insurance’s insurance carrier statements recognized during the 2020 fiscal year (January 1, 2020 to December 31, 2020).

Part 1 – Information for Franchise Producers (2020)

• There were 713 franchise producers, representing 529 franchised businesses, who were included in the charts because they operated during Goosehead Insurance’s entire 2020 fiscal year (January 1, 2020 to December 31, 2020) and met certain criteria, noted below.

• Each of the franchise producers included: (a) had a start date on or before January 1, 2020 and were still operating as of February 5, 2021, (b) worked for a franchisee that was, during that period, in compliance with, and not in default of, the franchise agreement, and (c) had a role where a majority of their time was dedicated to new business production.

• 82 franchise producers who operated during the entire 2020 fiscal year were not included in the results because they did not meet these criteria.

• “Tenure” is defined as the number of full years an agent has devoted full time efforts to a production role as of December 31, 2020.

A. Gross Revenue Per Franchise Producer (2020)

• Total Number of Franchise Producers:  713

Tenure: 1 Year

• Number of Franchise Producers:  274
• Average:  $65,146
• Average of Top 25%:  $130,157
• Average of Bottom 25%:  $21,879

Tenure: 2 Years

• Number of Franchise Producers:  174
• Average:  $116,347
• Average of Top 25%:  $222,896
• Average of Bottom 25%:  $40,875

Tenure: 3+ Years

• Number of Franchise Producers:  265
• Average:  $226,499
• Average of Top 25%:  $438,108
• Average of Bottom 25%:  $79,688

B. Premium Per Franchise Producer (2020)

Tenure: 1 Year

• Number of Franchise Producers:  274
• Average:  $427,164
• Average of Top 25%:  $842,974
• Average of Bottom 25%:  $146,331

Tenure: 2 Years

• Number of Franchise Producers:  174
• Average:  $801,296
• Average of Top 25%:  $1,547,062
• Average of Bottom 25%:  $289,701

Tenure: 3+ Years

• Number of Franchise Producers:  265
• Average:  $1,529,042
• Average of Top 25%:  $3,017,395
• Average of Bottom 25%:  $535,027

• These charts do not reflect the costs that you may have in operating your Franchised Business, including your Royalty Fees and other fees that must be paid to Goosehead Insurance.

• You will incur costs and expenses in connection with operating your Franchised Business. These include, among others, royalty fees (20% to 50% of Gross Revenues on policies), occupancy costs, labor costs, debt/financing costs, marketing and advertising costs, software and support fees ($440 or $305 per user), computer hardware and software purchases and upgrades, legal and professional fees, income and other non-real estate taxes, and various other expenses.

Part 2 – Information for TWG Producers (2020)

• There were 158 TWG producers who were included in the charts because they operated during Goosehead Insurance’s entire 2020 fiscal year (January 1, 2020 to December 31, 2020) and met certain criteria, noted below.

• Each of the TWG producers included: (a) had a start date on or before January 1, 2020 and were still employed as of December 31, 2020, and (b) had a role where a majority of their time was dedicated to new business production.

• “Tenure” is defined as the number of full years an agent has devoted full time efforts to a production role at TWG as of December 31, 2020.

A. Gross Revenue Per TWG Producer (2020)

• Total Number of TWG Producers:  158

Tenure: 1 Year

• Number of TWG Producers:  66
• Average:  $112,716
• Average of Top 25%:  $169,349
• Average of Bottom 25%:  $64,690

Tenure: 2 Years

• Number of TWG Producers:  39
• Average:  $215,144
• Average of Top 25%:  $316,107
• Average of Bottom 25%:  $145,811

Tenure: 3+ Years

• Number of TWG Producers:  53
• Average:  $369,849
• Average of Top 25%:  $553,627
• Average of Bottom 25%:  $232,249

B. Premium Per TWG Producer (2020)

Tenure: 1 Year

• Number of TWG Producers:  66
• Average:  $596,424
• Average of Top 25%:  $906,788
• Average of Bottom 25%:  $344,034

Tenure: 2 Years

• Number of TWG Producers:  39
• Average:  $1,233,015
• Average of Top 25%:  $1,816,859
• Average of Bottom 25%:  $853,943

Tenure: 3+ Years

• Number of TWG Producers:  53
• Average:  $2,311,559
• Average of Top 25%:  $3,494,827
• Average of Bottom 25%:  $1,431,378

• Some agencies and producers have earned this amount. Your individual results may differ. There is no assurance that you’ll earn as much.

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