Why the location of your franchise is so vital to your success

If you're considering opening a new franchise and are searching for suitable premises, you'll know just how difficult it is to find the ideal location. In such a situation, it’s tempting to stop the search and go with a ‘second best’ option that’s not quite right, but not too bad either. This is not a good idea. Location is one of the most critical factors in determining whether a business succeeds or fails. Most profitable franchises spend a considerable amount of time searching for the perfect home for their businesses and won’t settle for anything less than ideal. Here, we take a look at why location is so important.

What makes location so important?

Location is just as essential to franchise units as it is to any other type of business. While the right business premises can contribute an enormous amount to your sales figures, the wrong location could spell disaster for the franchise. Location is an important factor in determining whether a franchise will be successful for many reasons. They include;

• It determines who visits your business – When looking for a particular product or service provider, customers typically prioritise convenience. In most cases, convenience means geographical proximity. Where you locate your business is vital because only those that live, work, or pass by on a regular basis are likely to become repeat customers. If the people that live, work, or pass by aren’t your target market, the business is in trouble.

• It determines how people visit your business – The infrastructure and transportation links around a business often dictate who can and will visit premises, too. For instance, locating a retail store in an industrial estate that is only accessible by car is likely to limit the number of customers passing through severely. Place it in the centre of town – where there's plenty of public transport links, parking and other shops – and foot traffic will increase.

• It determines when people will visit your business – Different parts of a city are busy or quiet at different times. For instance, the high street is busiest on a Saturday. If a business is located on a popular commuters’ route, activity is likely to pick up during the morning and evening rush hour. The location determines the times customers are more likely to visit the business, so franchise owners need to ensure that their products are the types of products that are in demand during peak hours.

Industry dependent

As has been demonstrated, location is vital to a franchise because it determines who visits your shop, when they do so, and how they reach the premises. However, it’s also necessary to recognise the fact that location can be more or less critical depending on the industry you operate in. For instance, retail stores need to be in areas with a great deal of foot traffic if they're to succeed. They’re not the type of business that people go out of their way to search for and visit. To a certain degree, they need to ensure that they’re conveniently located and able to attract the attention of window shoppers passing by. On the other hand, a specialist car parts franchise can afford to be further from the action, as customers are more likely to go out of their way to visit the premises. When we get to franchises that are home-based or operate out of a van, location becomes even less relevant.

Large expenditure

Location is also particularly important because the franchise's business premises is likely to be one of the most regular substantial expenses you'll have to cover. Leasing a property is rarely cheap, and you don't want to be spending vast sums on premises that aren't in the right location. Make the wrong decision, and you could be stuck paying for a site that actively harms your ability to make sales and profitably deliver your services. This means that a great deal of thought must be put into premises selection before you commit to any particular location or sign an agreement. In many cases, your franchisor will be able to help you find suitable premises and negotiate the lease. This ensures that you've got the best possible chance of success when the business opens.

Territory based franchises

It’s also important to consider how territory-based franchises make decisions concerning their location. If you've been provided with a specific region to whom you must deliver services and products, you'll need to think about how your location impacts on your ability to deliver those goods at the lowest possible cost. More often than not, this means establishing the franchise base in the centre of a territory. This allows for easy access to all corners of the territory and prevents the business from wasting valuable time and resources travelling the entire length of the area.

Using the franchisor’s reputation

Finally, anyone opening a franchise should consider ways in which they can leverage their franchisor's reputation for negotiating better leases and improved locations. Many property agents will be wary of doing business with an individual entrepreneur, but having the backing of a large, well-known franchise behind you can open doors to exciting, new opportunities. It might be that you’ll get a better deal on the price by pursuing a property with the help of your franchisor. Using the franchisor’s reputation may also reassure the property agent and ensure you pay a lower deposit or can negotiate better terms in the lease.

Conclusion

If you’re going to make a healthy return on your franchise investment, you'll need to find a location that is ideally suited to your business. It's important to remember that a position that works for one company will not necessarily suit another. Franchise owners should tailor the premises to meet the needs of the business and the behaviour of those individuals in your target market. If you can’t find a location that meets these criteria, it’s best to wait for something suitable, rather than rush into a deal for a sub-standard location.