Siting your franchise

If you operate a location-based franchise, premises are a significant investment. You need to be sure of market potential before you commit funds to a new store, showroom or service outlet.

When you’ve got the relevant information at your fingertips, making the decision about where to site your new store or service outlet gets much easier. When you know all there is to know about your customers, where to find them, and how far they will travel for your product, you can make thoroughly informed decisions about location. With this kind of information, you can be sure you are giving your business the best possible chance of success.

So where do you start? Possibly the easiest way to explain the process is by way of a case study.

Case study

Our client company is in the home improvement industry selling direct to consumers and their franchise owner had successfully developed a thriving business, servicing in excess of 2,000 customers from one showroom. The franchise owner now wished to expand into a second showroom and needed to know the best location to site this before committing substantial funds on a lease and fitting out the showroom. There was also a need to identify the profile of the most profitable customers and which areas sales had come from.

The solution

Tech4T analysed the client’s customer base, identifying the profile and socio-demographic groups (segments) of its best customers. For each postcode sector (PE1 1 for example) within a 25 mile radius of the existing showroom, Tech4T calculated the percentage of people in these groups compared to the total population, thereby identifying ‘hot spots’ of people most likely to purchase and, in turn, determining the sales potential in each postcode sector. For ease of use by the franchise owner, this information was added to a location heat map, where market potential was shaded from light to dark, with dark identifying the highest potential.

Tech4T also overlaid drive time isochrones within a 25-mile radius of the existing showroom to identify the likely catchment area. With the ability to easily identify market ‘hot spots’ on the map, coupled with driving times to different locations, the franchise owner was fully armed with all the information needed to make an informed decision about the location of the next showroom. In addition, Tech4T plotted the locations of the existing 2,000 customers and colour coded each point to show how the sales value of each customer varied in relation to identified ‘hot spots’. This insight enables the franchise owner to apportion sales and marketing effort and spend appropriately to prospects in each postcode sector.

Benefits

  • Geographic visualisation of areas with high sales potential displaying a choice of optimum locations for siting a new showroom
  • Identification of best customer profiles and areas containing the most profitable customers ready for market targeting
  • Differentiation of customer types by value and product purchased, thus enabling cross-selling opportunities to be exploited
  • Identification of customers in areas outside ‘hot spots’ to enable focus of marketing activity in close proximity to those existing customers, perhaps using them as reference sites

Conclusion

If you operate a site-based franchise then identifying the prime locations for your franchise outlets is crucial. Locations that take account of accessibility, visibility and competition, and are surrounded by the right-sized target market, will help you maximise profitability and make your franchise offering more attractive to potential franchise owners.

Written by Graham Barlow, Managing Director of Tech4T