Location is a critical factor to the success of any franchise. But unless you are committed to having a great operation focused on the needs of your customer, you can have the greatest location in the world and still fail.
To be successful, every franchise needs a mixture of these factors:
- The right location
- A great product or service that consumers want to buy
- Superb customer service
- A marketing message supported by your brand
- Consistency in your delivery
- The right price
When you are looking for that perfect location, you need to first understand what type of locations will work for your franchise and which ones won’t. A top-notch franchisor will be able to provide you with the site criteria required to run a successful franchise. Well-established franchisors have experience in different markets and in locations that vary in size, shape, surroundings, and customer draws. The franchisor should be able to provide you with not only the site criteria, but should also connect you with a local broker who can assist you in finding the right location. When making your franchise selection, talk to the existing franchisees in the system and see how helpful the franchisor was in getting them the right site for their businesses.
What makes a great site varies from business to business. What do you need from a location? If your business requires customers to come to you, then visibility and accessibility will be important. But if you run a service business and you go to the customer’s home, then parking spaces for your cars and trucks, warehouse space, loading docks, and access to highways will be more important.
Overall cost is also an important consideration. If your business plan allows for $15 per square foot space and the available space is $30 per square foot, you are going to need an enormous increase in customer traffic to justify the increased price. Also, if you need only 2,000 square feet but find a 4,000 square foot space at half the price, is bigger necessarily better? Maybe not. A 2,000 square foot restaurant that is full will look busy and be attractive to customers. At 4,000 square feet it may look empty and less appealing.
You also need to understand some of the basics of how to evaluate real estate:
- Population density. How many people or businesses are in your trading area? Are the people in the neighborhood the right background, age, size, and income for your type of business?
- Traffic generators.Are there other nearby businesses or draws that will help bring you customers? Some common traffic generators are malls, office complexes, schools, hospitals, grocery stores, drug stores, and department stores. These are all high-traffic locations that have repeat customer traffic. If you own a women’s hair salon, being located near women’s clothing and shoe stores may increase your traffic. Feeding off of your neighbors’ customers is the cheapest type of advertising there is.
- Traffic count and accessibility. How much traffic, both by car and on foot, pass by your location? It’s not enough to simply count cars or people. Are the cars going too fast to notice you? If they see you, can they get to you easily? Are you on the right side of the road? If not, a lot of traffic will not be very helpful. If you have high foot traffic during the day but you need evening traffic, having a lot of people walking buy at noon will not benefit you.
- Competition. Where is your nearest competitor? How strong is its reputation, and what is it going to take for you to compete with them? There are many businesses that thrive in areas in which their competitors are literally next door. Furniture stores and quick-service restaurants are frequently in the same general area as their direct competitors. However, if you are a drug store and there is a CVS or a Walgreens next door or across the street, the market may be too saturated for you to succeed.
- Security. Is the area and the location safe for your customers and your staff? Are neighboring businesses and properties well-maintained? If your business is in an area that is run down or is known for its high crime, customers may not to come to you, even if you are conveniently located. Make certain that your customers will feel safe and secure.
- Employees. Can employees get to you? Are there people in the area willing to work for you? If your employees will need public transportation to get to work, are you on a bus route? If you plan to hire employees locally, make sure that the pool of candidates is large enough or your pay scale may go through the roof. If you are looking for entry-level, minimum-wage employees and every kid in the neighborhood is driving a BMW, will you find enough affordable staff?
- Visibility, signage, and zoning. Will customers be able to see your business and your sign?
These are only some of the criteria to consider. Your franchisor should be able to provide you with information on the type of location you should be looking for.
Finding a great location can seem daunting simply because many of the great sites have already been taken. But if you understand what you need and work with experienced commercial real estate brokers and your franchisor’s real estate staff, you will limit your risk and hopefully quickly select a location that meets your needs.
Keep in mind that in most cases, when a franchisor “approves” your location, they are only verifying that it meets their minimum criteria. They are not guaranteeing that you will be successful in that location or telling you that there are not better locations in the same area. Those decisions are yours alone to make. Do your homework carefully.