Special Report #108
©COPYRIGHT 2004 Franchise Growth Systems– ALL RIGHTS RESERVED
SELECT & EVALUATE A GOOD LOCATION
Selecting a good location for your
retail franchise will be one of the most important decisions made
that will determine the success of the franchise. A good
understanding of how large the territory or trade area of the
franchise will cover should have been thoroughly investigated
before signing a franchise agreement. The franchisor should be
able to supply the franchisee with demographics and pertinent
information about the trade area. Additional information will be
needed before a lease is signed. The following should be
Population density. How many total people and/or households
are in the proposed location area. Does the area have room for
growth? Is the area highly populated with family houses or
apartment buildings, and how will that affect the franchise? What
are the ages of the population in the area?
• Income demographics. What
are the average household incomes in the area? What is the typical
income group the franchisor is targeting for the franchise? Does
the neighborhood nearby look as if they would use the type of
product and services offered by the franchise.
• Number of businesses.
Will the number of businesses affect the location? Will the type
of businesses in the area use the product or service offered by
• Type of site. Do the most
successful franchisees in the system locate their franchise in a
mall, downtown area, strip mall, stand alone building, industrial
centers? The franchisor should be able to give information on
theses types of sites.
• Traffic counts. How many
vehicles pass by the location every day? What is the foot traffic
that passes by every day? Will people passing by see your business
sign? Is the location easily accessible?
• Traffic generators. If
the location is in a strip mall, often the best traffic generator
is a grocery store or some other type of anchor store. Sometimes
rents are less expensive when the location is across the street
from a good traffic generator. Is the location close to a
university, hospital or other large traffic generator?
• Employee access. Are
there a sufficient number of potential employees nearby to
properly staff the franchise?
• Zoning. Is the location
properly zoned for the franchise operation?
• Competition. What is the
competition like nearby?
• Appearance. Is the
location area clean and orderly? Is the neighborhood nearby clean?
Other considerations to finding a good site:
• The franchisor should
already be good at locating sites. They should be willing to help
find the site, give good advice and help negotiate the lease.
• A good commercial real
estate broker is necessary to help understand the market. In many
cases their “connections” will allow the franchisees to get better
terms on the lease.
• Using demographic
computer programs like www.mapscape.com will help in analyzing
nearby competition and other demographics.
• Use the franchisor’s
expertise as much as possible but when it comes right down to it,
they cannot guarantee it. Other than approving the site they will
distance themselves from it to avoid liability.
List of demographic criteria available for use in determining top
1. Age: What is best age group for unit?
2. Number of households
3. 75,000 per income per household
4. Total population (in any given area)
1. Competition in area
2. % of population in targeted age group
3. Number of males & females
4. % of population with income over 75K
5. Number of households with income over 75K
6. Average household income
7. Median household income
8. % of population with Bachelor Degree
9. Medium home value
10. % of population white collar workers
11. Population Density