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Franchise Territory Management - Site Selection

There are an extraordinary number of online resources available for assessing or comparing franchise locations. Perhaps you have one or multiple franchise sites, and you want to evaluate their worth. Defining catchments or territories, assessing buyer density and gross earning power, and other techniques give you the tools to put a strong valuation proposal together. 

But what if you don’t have a site yet? How do you look at a vast region, and narrow it down to a few prospective options? 

How do you shrink the map? 

Heat Maps

All franchise valuation models, whether inbound or outbound, rely on population count or density calculations. So this is a good place to start. 

If you have a target demographic in mind, most advanced GIS applications will allow you to run a heat map against your target country, region or locality.

PopEx heatmap of all 35-39 year old women

Heat maps are particularly useful for visually identifying population trends. If you are looking to concentrate on one region, and you want a visual reference point for density pockets in that region, heat maps are your friend. 

Population Explorer provides easy, one-click tools for generating demographic heatmaps across the entire globe.

 

Resource Availability

Many franchising operations have infrastructure dependencies. Identifying the location of these dependencies is another method for shrinking the map. For example, if you are an ISP, you will need to implement in locations in proximity to favorable data centers or other infrastructure.



This extends further to ‘anchor’ sites, larger stores which provide a complementary experience to yours. Locating these anchor sites in target regions is another use-case for this strategy for shrinking the map. 

Drilling Down Further

Now that you’ve narrowed down either demographic hotspots or resource centers for your new market, it’s time to identify and rank potential sites. 

You’ll first need to determine whether this is an inbound or outbound sales model. More information about that distinction can be found here. 

Outbound sales models generally try to create evenly populated, or economically even territories so that pricing and revenue goals may be more easily controlled across the entire portfolio. Site locations within those territories is of much less consequence, since customers aren’t expected to visit the site.

 

 

 

 

Inbound sales models require careful consideration of the buyer behavior. Some of the critical questions include:  


  • How long would a buyer travel to buy my goods/services? 
  • If a competitor was closer, would the buyer visit them first? 
  • Within that ‘driving range’, how many potential customers will I have? 
  • How much buying power do they have? 

The answer to question 1 informs the type and time of isochrone you can develop to define your ‘catchment’ area. Using PopEx, you can lay this isochrone into the system and it will automatically tell you how many people live in that area, as well as there buying power. 

Answering number 2 becomes a bit more complex, but the answers are incredibly powerful! There is a large range of what the statistical community terms ‘gravity models’ that predict the likelihood of one store being visited over the other. 

 

Interested in learning more about the franchise process? See these related articles: 

Want help putting together all of these pieces? Our world-class analysts will provide free consultation, no strings attached. Request a consultation here.