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Finding a Good Franchise Location

Location. Other than choosing a good franchise concept, it’s one of the most important factors in being successful as a franchisee. And honestly, location factors into whether a franchise concept is a good fit for you as well. Does the area you want to open a franchise within actually need (or can it support) that product or service?

But before getting to the where of location, you have to figure out the which – as in which kind.

Many franchise concepts come in different sizes, meaning there are different places a unit can fit. The two most popular franchise location setups are traditional and non-traditional.

Traditional locations are typically free-standing units, meaning the building the franchise is housed in only is used for the purposes of the franchise. These locations typically have their own dedicated parking lots.

Non-traditional locations, also called satellite locations by some franchisors, typically aren’t the main attraction of where they are located. These franchise locations operate in a smaller footprint, typically as part of a mall, retail store, strip center, airport, university, hospital, gas station, etc. Non-traditional locations can include kiosks and carts too.

Once you figure out which kind of location you’re going to open, then you can figure out where.

The overall goal of a franchise, or any business venture for that matter, is to be profitable – preferably as quick as possible. And in order to be profitable, you must be visible to your potential customer.

However, visibility when it comes to a location typically isn’t cheap. If not balanced properly with the other factors of franchise ownership, a visible location won’t always translate into profitability.

For example, a franchise unit that has great visibility might do a massive volume of sales. But if the lease (and other overhead costs) are much more than the franchise is bringing in, the franchise will fail. Conversely, a franchise unit with not as much visibility comparatively might not do as much volume as the other location but, with presumably lower lease costs, it can bring in a better profit than its more visible counterpart.

“Where franchisees put their new location matters – a lot! In the grand scheme of things, a franchisee can do every other thing ‘right’ but if the location is wrong, they can still fail. With so much on the line, finding the right location is one of the most important decisions of any new business owner, whether franchise or independent.”
~ Carolyn Miller, author and founder of the National Franchise Institute
So how do you go about finding a good location?

First, tap into your own knowledge of the area. You probably know more than you think. Consider the site you’re thinking about for your potential franchise unit. How much traffic goes by on a typical weekday? On the weekends? Is it near a potential source of customers like an office park or a hospital? Are the neighboring businesses competitive or complimentary? Have you ever been to shop in that area? Is it easy or difficult to get in and out of?

Also, talk to local real estate agents that specialize in commercial real estate. It’s their job to know about vacancy patterns as well as the general landscape of business in their area. Not to mention, working with a real estate agent gives you access to the contacts they have built over the years.

But most of all, don’t forget about the franchisor. Many franchisors provide guidance to their incoming franchisees in regards to location selection and, sometimes, lease negotiations as well. This help can be a big boost to finding an optimal site. Furthermore, most franchisors reserve the right to approve the location franchisees choose before finalizing the franchise agreement, so you’ll know if you’re on the right track.

“The franchise development team will help you identify the best place to put a practice based on demographic studies,” says Sharmi Cattani, the Franchise Development VP for Physical Therapy NOW. “We assist franchisees with site selection based on demographic studies of referral sources, population density, cost of living, quality of life and future livability.”

Often times, the study franchisors do involving location planning involves specialized software, which assists them in modeling the future performance of franchise units with respect to their specific concept.

For example, programs from providers such as SitesUSA and SiteZeus allow franchisors to drill down into the demographics of an area, even allowing for the mapping of competitors or businesses that will complement a franchise. Other programs allow for the building of “heat maps” based off of a certain number of characteristics that have been found to frequently engage with the franchise system. Those heat maps can then help franchisors and their prospective franchisees locate potential market areas.

Finding a good location shouldn’t be rushed. Franchise agreements can last up to 20 years (even longer for a select few). Taking time to find the right location is crucial to making a franchise venture as successful as possible.