Franchise Territory Mapping :Sparkleminds

Optimize Your Franchise Territory Mapping

Written by Sparkleminds

A very important part of the franchise agreement is where the franchisee will operate and how the franchise territory mapping is set to clear. As and when a franchise expands, the number of franchisees grow. Apart from external competition, franchise competition increases to capture a market. The location of these franchises has to be strategized with market allocation. Whether it’s a product or service franchise, the needs of the customers in the location plays a vital role in generating revenue.

Having a good market study based on location-based analysis to select franchises can help businesses operate more efficiently and make better decisions. When a franchise knows a potential market, capturing it would be critical as a first-mover advantage. A franchise can tremendously be benefited if all territory mapping strategies are made with numbers backing them.

To maintain healthy and consistent growth, strategies for franchise territory mapping has to be done with customers in the main focus. Every franchise has its own unique set of target audiences whom they serve to. On top of, understanding the characteristics, tastes and preferences become important. Through segmentation, franchisees are able to offer effective sales incentives. Franchisees will be provided with adequate territory to generate and maintain a revenue stream that does not have to deal with direct competition from other franchisees

Franchisor role in franchise territory mapping

  • Demarcation of Franchise Territories

This is the most common criteria for any franchise expanding. Territories can be defined using simple metrics such as distance radius, ZIP codes, population size etc. Once a franchise knows its strengths and weaknesses, it can have a market strategy to implement on the location that will assist in making the franchise a success.

  • Roadmap for the future

The franchise territory mapping has to be done with the future business kept in mind. An environment that is developing has to be always under surveillance. They are the opportunity that cannot be missed at all costs. Hunting down locations that can add revenue and cater to a larger audience creates better positioning and ease of access to the customers. Conducting territory optimization analysis sets a road map for the franchise for expansion and recruiting a local franchisee at the said location

  • Overseeing Franchise Territories

Investing in franchise territories at the beginning itself will improve the efficiency of your franchise sales and ultimately reach your franchise expansion goals. Success in selling a franchise begins with providing the supply of the current and future demand of customers.

Territories are the fundamentals for any franchise as it provides them with revenue, customers, and the endless potential for growth. Choosing the wrong territories can have a detrimental effect on a business’s potential to grow. For example, if a territory is too small, there will be minimal opportunity for expansion. In addition, if a territory is chosen with little regard to location, you may find that neighbouring franchises are constantly competing for your customers.

To maximize revenue in a particular location, franchisors may offer various territory rights:

Exclusive: The purpose of an exclusive territory is to ensure that franchisee has a large enough market to be successful and a small enough market to be efficient and effective. With exclusive territory rights in the franchise agreement contract, the franchise is the only source of the franchisor’s goods or services in your agreed-upon geographic area. Lack of territorial definition can create business risk for franchisees.

Protected: Under this, a franchisor agrees with a franchisee that it will not appoint an additional franchisee in that franchisee’s territory. However, the franchisor can operate the franchise business in the territory from some other sources, such as company-direct internet sales.  

Unprotected: In some franchise systems, there is no territorial protection to its franchisees. A franchisor wants to get as much revenue as possible from its franchise locations. The possibility of franchisors opening competing stores is high in this system.

Location strategy is essential to any franchise business. The way in which you define your franchise territories and the locations where you build your stores will ultimately determine if your business is successful or not. Franchising territory mapping can help improve your decision-making and ensure that you make the right choices in terms of territory creation and site selection. When franchise territories are properly allocated, you can achieve greater economic benefits.

Once the territories are very defined, it becomes easy to compare the performance of different territories side by side and better understand that factors may be impacting the performance of that franchise. Various factors can influence performance, such as location demographics, territory demographics, and competitor locations. Franchises that leverage territory mapping is able to efficiently create and manage sales territories which helps drive sales and overall growth within a company.

Franchisor support to maximize your franchise is important. Territory mapping can benefit both franchisers and franchisees. No matter how a particular franchisor establishes territories, understanding how territories are determined and are well-respected among all franchises acts critical to have minimum disputes among the franchise in the long run.

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