How to sell more territories

Graham Barlow, Managing Director of Tech4T, explains knowing what makes a territory successful is vital when looking at expanding a franchise network.

Whether you are launching a new franchise or have already created a profitable one, knowing what makes a franchise territory successful and, therefore saleable, is crucial.

This doesn’t just mean profitable. It’s more about which factors make one territory more profitable than another. Knowing this determines the optimum territory size and make-up needed to deliver the expected return on investment for the franchise owner.

Making territories easier to sell

If predicted profitability for a new territory can be substantiated, major objections to taking on the franchise can be countered. Questions such as ‘how can I be reasonably sure this territory will give me a good return on my investment, and how quickly?’ can be answered. Importantly, the prospective franchise owner will trust the information.

How do you substantiate projected income levels?

The answer lies in how your own internal data can be combined with external demographic and business statistics, then transformed, analysed and applied to Postal geography to predict the likely earnings from a territory.

With a new franchise venture this is not easy, as the financial facts have yet to be established. However, if the franchise is being built around an existing successful business, or if an established franchise wants to expand, a forensic analysis of data collected by the business can yield the important insights needed.

It goes without saying that you need to know the sales data, but to really maximise revenue you also need to gather information to explain the following:

  • What triggered the most interest in your product or service? Was it cost effective?
  • What made customers buy? Was it the sales person, the uniqueness of the product, the sales approach, the offer or the timing?
  • What does the profile of your best customers look like? And where are they concentrated?
  • Where are your competitors operating and how much of a threat do they pose?
  • What is the lead-time from initial enquiry to order? If multiple purchases, what is the gap between them?
  • Does order value grow or decline over time?
  • Is there plenty of potential and what will this look like in five years’ time?

With this information and using the right technology and analysis skills, mathematical equations – including multiple regression and gravity models – can be developed to specifically match your business and predict the likely income for each new territory’s catchment area.

All in all, the benefits to a franchise of a thorough analysis of territories cannot be over-estimated. An in-depth understanding of what customers look like and where they are likely to be concentrated, what triggers most interest in your product and, last but not least, facts and figures demonstrate how the worth of a territory has been calculated.

No data to start off?

If little financial data exists, then I would advise you to go slowly. First establish a pilot and work closely with specialists so you can be certain the right information is captured from the outset. This data can then be turned into the provable financial returns subsequent franchise owners will need to give them the confidence to invest.