LOCATION, LOCATION, LOCATION

Hot tips for site selection.

Franchise site selection is critical.

As any franchisor will tell you, location is one of the critical factors to a franchise’s success.

What goes into choosing a location? How does the franchise know that a particular suburb and street will be a winner for the franchisee? It’s time to take a look inside the process of location selection and what you should know as a potential franchisee.

Most site-based franc hise groups should have an experienced property team dedicated to finding and assessing locations on behalf of the franchisee. This team develops strong criteria, which outline the minimum specifications to ensure the properties selected for sites are prime locations.

CHOOSING A HOT SPOT

The first thing considered is the size of the population in the area, the demographic and the direct and indirect competition. By knowing the supply (competitors), demand and unmet demand of a location, property hotspots can be identified where supply is low and demand is high.

Franchisors often have access to large-scale data to be able to assess these key aspects with precision. For example, in the fitness industry, we use a data science provider called ActiveXchange. This partnership provides access to data-based business and market intelligence from over 350+ gyms and leisure venues, drawing on up-to-date data from over 2.5 million members.

ON GOOD TERMS

After a site is chosen, commercial lease terms are negotiated and these are just as important as finding the right location, because these terms impact the longevity of the business and the franchisee’s bottom line. If favourable conditions can't be agreed upon for a particular location, it may not be the right one even if all the other boxes are being ticked. Terms you can negotiate with the landlord include a free rent period, landlord contributions, the rental amount and the length of contract. It is important to ensure that the lease term corresponds with the franchise term.

CAN YOU CHOOSE YOUR OWN LOCATION?

Some franchisees source their own property. However, most franchisees work hand-inhand with the franchisor due to the intelligence they can access for site selection, their experience and brand knowledge along with their negotiating power.

Due to size and scale, at times a large franchisor could be negotiating on as many as 20 properties with the same landlord or agent. This scale allows access to significant discounts in rental terms and large contributions from landlords, which significantly assists franchisees to reduce set-up costs. Before negotiations, we discuss with the franchisee their objectives and goals to ensure we tailor the lease terms strategically to their needs and get the best possible deal for them.

GETTING DOWN TO DETAIL

After a potential suburb is chosen, additional details are reviewed as potential streets and buildings are considered. The immediate area around the site comes into play – what would foot traffic be like? Is traffic and car parking at an acceptable level? Can customers access the site easily and safely? Can traffic turn into the location from both sides of the street, or does a median strip prevent access on one side? Is it an out-of-the-way location? Is the entry prominent? Are there good positions for signage? Will the franchise fit into the overall retail offering in the area and support local retail business? What’s the condition of the site and how much building and remodelling is required?