SEEK AND DISCOVER
Stay alert to the pitfalls and potentials of a site as you search for the perfect location, and use your access to franchisees and the franchisor to ask crucial questions.
Stay alert to the pitfalls and potentials of a property site.
The right location is vital for any bricks and mortar business. It can make or break it. Sameer Babbar is CEO of strategic analytics firm SVB Group and works with franchisors to deliver location planning. He p oints out t hat b usiness operates under many levels of hierarchy:
Things that happen in the store (staff age, number of staff, number of products, how often it is stocked etc.) and things that happen in the site (decisions that business makes, signboards, accessibility, parking etc.). Things that happen in a trade (demographics, psychographics, population coming in, population going out, tourism, how far customers are willing to travel, how far the business delivers to customers etc.).
Things that happen in the region (policy changes, major developments etc.). Besides t his, t here a re other geopolitical and national issues that extend to state, countr y or national boundaries.
If you have a supportive, well-resourced franchisor there will be help on hand to evaluate the potential of a proposed site. “You n eed data t hat is accurate, current and of high quality so that the decision will stand the test of time,” says Babbar.
The more you know about the site, its potential, the overserviced and underserviced areas … the better equipped you are to make the right decision.
“It is very much like peeling the layers of an onion: you need to keep going as far as you need to go,” says Babbar.
In addition to all the details above, it’s crucial to understand how the franchisor views the allocation of sites, and how close is too close for a neighbouring store.
Babbar explains the franchisor’s perspective.
“It’s important to get a balance of distance between outlets. You want to ensure that customers who are at the fringes of an area have an alternative option to shop, particularly if they are in the gaps between the catchments and that falls in lucrative areas.
“But too close proximity of stores may lead to too much cannibalisation and over-investment. This may not be evident in the short term but as the market saturates it becomes more obvious,” he says.
14 QUESTIONS TO ASK ASK THE FRANCHISOR:
• Who finds the site?
• How are locations evaluated?
• Who negotiates the lease with the
landlord?
• Who will hold the head lease?
• How close will you put another outlet?
• Do I get first refusal of a neighbouring
site?
• What happens if I leave the business early?
• Is there an optimum time to open a business?
ASK FRANCHISEES:
• How long did the site selection process take?
• Is there anything the franchisor could have done better?
• How accurate was the costing for the
legals, lease and fitout?
• What obstacles did you come across
before you opened the store?
• Do you have any tips on making the
process as smooth as possible?
• What have you learned about your
location since you have been trading?