Territory mapping is driving efficiency in the franchise world with sophisticated statistical analysis to make sure franchisors provide the perfect amount of territory to new recruits. Gareth Samuel investigates how territory mapping companies’ blend of experience, statistics and collaboration can save franchises thousands.
Before any new or existing franchise can recruit a franchise owner, there must be a territory or market with enough commercial scope available for a franchise owner to be successful in.
But with a mind-boggling plethora of variable factors, getting the portions right is as complicated as it is crucial.
A perfect territory has to have ample potential for a franchise owner to be wildly successful, while suitably-sized to enable the franchisor to sell as many differing territories as possible.
Stuart Lee is the Sales and Marketing Director at Atlas Mapping. He says: “Each territory has to have enough commercial opportunities within it. But one of the most common problems we see with franchisors is that they have given their new franchise owner far too much territory based on very little research.”
Many franchisors initially give away large territories to appeal to potential new franchise owners, but this can in fact be counterproductive for both parties. For a franchise owner, having too large a territory can mean being stretched too thin leading to ill-fated rapid expansion and travel costs can skyrocket exponentially with large territories. For a franchisor, giving away a larger territory than necessary can lead to fewer franchise opportunities available to sell and gaps within the country that are not covered by any representative and are not saleable.
But, by using the pioneering services of a territory mapping company, such as Tech4T or Atlas Mapping, franchises can strike up perfectly shaped territories, tailored specially for them and ultimately save huge sums of money.
Francesca Barlow, of territory mapping specialists, Tech4T says: “We use market penetration and translate that figure to other areas of the country, using our statistics for different demographics. This way we make sure that franchisees have the potential to make enough money and franchisors are not giving too much or too little territory away.”
Stuart adds: “We use special software that plots every household in Britain within a socio-economic category, of which there are about 80, and then we use this to plot which territories have the most potential for commercial success and adjust the territory boundaries accordingly.
“We conduct such in depth statistical analysis by using the franchisors customer base and plotting every customer they have ever had on our software. By doing this we can see everywhere a particular franchise has worked and then we start to create territories.”
The software that territory mapping companies use is incredibly complex, with formulas and reams of points used to determine exactly which territories are most suited to a particular type of business. But, as Stuart says, it is also down to the franchisor to have a good knowledge of their own business model: “The main factors to get the best out of territory mapping is our experience and expertise, the franchisors understanding of their own business model and the statistics – they are all of equal importance.”
Because of the nature of franchising, no business model is the same for any company. Therefore, territories that may be appropriate for a fast food location may be far too small for a business consultancy service franchise. These factors are all taken into account and are inputted into the spider’s web of affecting points to determine suitable boundaries.
In the past, many franchisors have been tempted to use their own judgement in dividing up their territories to save money, however this can, in fact, achieve the opposite. Francesca explains that getting it wrong can be costly for a franchise: “Businesses that attempt territory mapping themselves tend to allocate postcodes, which means that they can’t be sure what exactly is in an area. We have huge amounts of data about demographics and households in very specific areas that we use. “Giving away too much territory is very common for franchisors. One business we recently helped needed to give away an area with approximately 75,000 households but they actually gave away an area with about 3 million households.”
The advantages of utilising the extensive services that territory mapping companies provide can be one of the best ways for your franchise to save money and maximise profitability throughout the country.