Franchise Site Selection

When you buy a franchisee you be offered a site that has been selected by your franchisor but you should still investigate all aspects of that site as it is your responsibility to ascertain that it offers the opportunity to maximize your investment yield and that the area it is in provides a strong demand for the goods and or services that your business will market.

Look particularly at foot traffic and more importantly the demographics of the traffic that will frequent your store. Determine if the types of people that live around your site, or that travel to it, are the potential customers that would utilise your services. What competition will you be up against? If the competition is well entrenched it may be difficult for you to gain a foothold with your new business. Buying customers with extensive marketing is not always cost effective particularly when your competition has developed brand loyalty that you will find difficult and expensive to break. An expensive advertising campaign may not have been factored in by your franchisor and will add to your working capital requirements.

Competition in itself is not a bad thing because if your competitor has done well there is also opportunity for you, particularly if there is a gap in the competitors offering or weaknesses in their strategies that you can exploit.

Evaluating your franchisors marketing strategies and marketing allocation for your launch are important but do not just rely on them, do your own investigation and prepare your own marketing plan. If required get professional assistance with your due diligence.

Site research is important, not just to determine the viability of a single franchise you may be looking at investing in, but also the potential of the area around your site. Perhaps there would be a further opportunity to look at discussing with your franchisor first right of refusal on new stores in a given proximity of your site enabling you to control a potentially lucrative area as you develop it. Master Franchise opportunities may also be available where you would act as the Franchisor in an area provided by the franchisor and protected under agreement allowing you to sell other franchisees within that territory and profit from the upfront and ongoing revenue from that network.

It all stems from diligent appraisal of the site offered when you buy a franchise.

By Sanam Ali