Territory size – do you measure up?
Graham Barlow, Managing Director of Tech4T, explains the vital factors that affect a franchise’s approach to sizing its territories.
Whether you are starting a new franchise, running an established brand or looking to expand overseas, you will recognise the need for clearly defined territories – areas in which franchise owners can exclusively operate. Each area needs to provide sufficient business opportunities within a sensible driving distance, and to convince franchise owners to invest their hard earned cash in your business, you will need facts and figures to substantiate projected income.
When territory design is undertaken correctly the rewards speak for themselves: no oversized territories, increased income, easier to sell territories, no conflicts over territory boundaries and more satisfied franchise owners. So it goes without saying that basing territories on a Postcode map or Yellow Pages regions is never a good idea; operating areas must be purposely developed to give franchise owners the maximum chance of success.
Territory design obviously needs to take account of a primary balancing demographic together with drive times, but there are other vital factors that could have a radical impact on your approach to correctly sizing territories. Some points to consider are:
- Franchise owner capability. All people are equal? No, clearly different franchise owners work in different ways, have different skills, have different drivers and most importantly, some are natural sales people while others are not. If a territory is correctly sized for a sales-orientated person, providing a similar sized area to someone who may be investing their redundancy payment in your business, but has no sales background is likely to result in unrealised sales potential from that territory.
- Customer profiling. Profiling your customers, in essence, refers to identifying the characteristics that differentiate your customers from people who are unlikely to ever buy your product or have need of your service. Therefore territories need to contain sufficient numbers of the ‘right’ type(s) of people or companies.
- Marketing. Who is responsible for getting the leads? Franchisor, franchise owner or both? How easy is it to get leads and what channel delivers them? The answers will directly determine the size of the prospect pool required in any given territory.
- Franchise owner sales structure. So how many people should a franchise owner employ to meet sales targets? Does the franchise owner decide or are the numbers dictated by the franchise model?Are sales visits required? How many visits to get a sale? Matching the capacity of a franchise owner with that of the expected sales workload will again directly affect how territories should be crafted.
- Competition. A territory that already has significant competition may need to be larger than one that does not – for obvious reasons.
- Product lifecycle. If your product is a one-off purchase then territory sizing will need to allow for a constant flow of prospects. Where each individual buys often, the prospect pool can be less.
Clearly there will also be other factors that need to be taken into account when designing an optimum franchise territory infrastructure, but with the correct approach and perhaps a little help there is no reason why you and your franchise owners cannot extract the maximum sales potential from the underlying territory geography.
Should you need some help with your territory planning, design, mapping and prospect targeting, please give me or one of my colleagues a call at Tech4T.
Readers of The Franchie Magazine can receive a FREE franchise territory wall map with all UK full country territory designs ordered before 30 April 2012.