Location of your franchise affects your income, expenses, sales, footfall, and reputation of the brand and sometimes whether you’re operating legally.
Despite the upswing in technology, virtual communication and cloud businesses, location plays a significant role in your business’s success or failure.
It’s not always feasible to start your company, create and shape a brand name from the scratch, and start an empire from the bottom.
Even if you start from scratch, you’re most likely to find it difficult to acquire capital and credit as your business would still be in its earliest stages of development with no validated track record.
Thus, buying a franchise and leveraging the existing brand goodwill over building a business from scratch is often an ideal choice.
Hence, it is considered that operating an independent business puts the wind up in number of ways as compared to running a franchise of an established brand.
However, this enticing business opportunity brings with it varied responsibilities as well. One of these responsibilities is to find an apt location for the franchise store.
The location of your franchise carries inordinate importance. Following is the list of tips on how to choose an apt location for your franchise.
1. Understand the Franchise Concept and Target Audience to Match with the Location:
While searching the locations for your business, the first thing you should consider is what you’re offering and who your customer base is.
It is always helpful to understand the concept of your franchise and target customer before choosing a location.
You must consider some facts related to target audience such as where they live and work, where and how they go by their days, and what drives people to your kind of business.
You should address questions such as – Who is your target customer? What are their purchasing habits and how the same may affect your business?
Where does it make most sense for you to be in location to them? Do you need a highly visible location or will your franchise grow more by word of mouth? To sum up, proper alignment of the concept, the target customers and the location bears desirable fruits.
2. Awareness about Local Laws in the Area, Demographics and Standard Business Practices:
The comprehensive goal of a franchise is to be profitable – preferably as soon as possible. Also, in order to be profitable, your visibility to your potential customers is must.
However, if not propped properly with the other factors of franchise ownership, a visible may not always yield profitability.
For instance, if the lease and other overhead costs are much more than the earnings of the franchise unit then despite great visibility, the franchise will fail.
Also, different cities and towns will have specific laws related to how businesses can function. That’s why you should be fully aware of all the permits, taxes, legalities and expected business practices in a particular area before deciding to set up your franchise business at a particular location.
Before finalizing the place of setting up your business, it’s essential that you have information about the demographics in a particular area.
When you have a clear idea about the demographics in the area where you are looking to open a franchise, it is most likely that sales and profitability boosts.
3. Use Franchisor’s Resources:
When it comes to choosing locations, most franchise networks will also provide you with support and advice.
You can make a more well-developed decision with the help of their knowledge and experience. Franchisors have goodly information about what locations bare best for franchises and some of them even have realtor connections and legal help which may make the process easier to a great extent.
They can certainly provide the franchisees marked information about certain locations, legal and real-estate insights that you as a franchisee may feel difficult to find without professional help.
4. Must Look for a Populated Area:
It is needless to say that an area where there are a lot of people will be an ideal location for the business. Factors like high footfall and vehicle traffic should be considered while selecting the location of a franchise.
Places such as malls, high streets, market areas and many more are good places where you can find high footfall, target consumers and the potential consumers.
5. Look at the Cost and Understand the Lease Details:
It is inevitable to consider the expenses you have to bring upon yourself to use it for your business when choosing the location of your franchise.
In some cases, you may save money by leasing a store that is not very easily accessible but since you’re not getting many customers, the present deal is not likely to work.
On the other hand, a location which falls in a very high footfall area and is full of pedestrians may cost higher. While you will get plenty of exposure to passing customers but if the cost of lease is too sizeable to make sense, then this deal too may not work.
You have to cope with by adroitly balancing these two things while figuring out what you can afford. The terms of the lease for the location you want can be complex and knotty.
Having help from the franchisor or their legal team can prevent mistakes that can shackle a new franchise.
Despite the possibility that the franchisor handles a lot of the lease negotiations for you, it is essential for you to be a part of the process and to have a clear understanding of all the modules of the agreement. You would certainly not want hidden charges to strike you later.
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Dhinal Baxi is a founder of franchise Insider. As a founder, he has served hundreds of clients. His experience from the financial sector has helped them to achieve great success in the franchise world.