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Finding the Right Franchise Location

You’ve heard it said about real estate, and it also applies to franchises: Location, location, location! No matter how exciting the franchise concept, no matter how well known the name, location matters more than anything for any type of business that relies on people coming into the premise. If your franchise location is not sited in a place that will draw customers, your business cannot succeed. In some cases, the franchisor provides assistance with the site selection and lease negotiation. This is a big advantage over having to do all the footwork yourself. Since the franchisor already knows from proven experience the right type of location that will draw customers, this is a head start on success. If it is up to you to find a possible location (and most likely the franchisor will have to approve it), there are many factors to consider before committing to any lease or real estate purchase. First of all, who are your customers and what places do they frequent? For instance,
  • fast food restaurants are appropriate in malls, on street corners, and on busy highways;
  • Doggy daycare centers are probably best located in the suburbs;
  • Video game stores appeal to high school and college students;
  • Fitness centers near office and apartment complexes will have a steady supply of prospective clients.
The franchise has to offer products and services appropriate to the people who live, work or play in the area. Study the area to see what draws people there. Is it on a commuting route? Is there a movie theater or sports stadium nearby? What time of day is it most likely to be buzzing with people?

Study the area carefully for the following...

 

Look at the traffic patterns – both for vehicles and on foot. Is there a continual flow of cars and people? If your customers are arriving in cars, is there adequate parking, and are the streets laid out for easy automobile access. If drivers have to twist their way through one-way thoroughfares, they’re less likely to go out of their way to get to your storefront. Is the location easy to spot, especially from a car? How close by is the nearest public transportation? All this seems obvious, but you had best make a list, and check them all. What about the community where you want to locate a franchise? Is it an up-and-coming neighborhood, and one in decline? Does there seem to be any trend about who is moving into the area? When considering the general demographics of an area in regard to customers, you must also look at the prospective employee pool too. If it is the type of business that traditionally relies on minimum wage workers, are there sufficient numbers of people to fill those jobs?

Study your competitors within your area of franchise...

 

Next, examine the competition. How close is the nearest similar store, and how well established is it in the neighborhood? Don’t count on being able to lure loyal customers away from an existing business. You must also refer to the UFOC to see if and how much exclusive territory the franchisor is willing to convey to you. It should be clearly delineated in terms of geographic mapping or population density. Be sure you understand how “encroachment” on your territory is defined. For instance, the franchisor might not open another store in your area, but may offer branded products in other nearby establishments.

Study premises and assess space, size...

 

Once you’ve found the right neighborhood and have a good fix on the competition, then start looking for actual storefronts. Does it have enough space and the right layout for the business? Often the franchisor will stipulate requirements as to floor space and your location choice must meet that criteria. Even if the location is good, it must offer the right kind of space to accommodate franchise procedures. Will it need much remodeling to match the franchisor’s layout requirements? Construction costs can create overhead too high to justify the location.

Study the 4 "C's"...

 

Basically, when looking to locate a franchise business, you must think about the four “Cs” – customers, community, competition and construction. These are the four factors that can make a franchise business a profitable success or a no-go venture doomed to financial failure.
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