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The truth about why some hardworking and capable franchisees fail


All things being equal – skills, determination, tenacity, funding – why do some franchisees excel whilst others struggle to establish a thriving business

We’ve all seen it. Two franchisees, both doing similar things, the right level of activity, but only one is really successful. At best the other one struggles along at a subsistence level, not enjoying life too much in the process.

There is naturally a tendency to think the poorer franchisee must be doing something wrong, not working as hard, is not a very good business person.  But in our experience, this is often not the case.  Detailed investigations of the right kind frequently tell a different story.  Most typical is a lack of potential customers most likely to buy the product or service being offered within a reasonable travelling distance.

This situation can have several causes; for instance, territories have been designed around a franchisee’s base location for instance, or based on total population (which ignores the fact that not everyone is going to be your customer). Either way, the actual number of real potential customers has not been taken into account when setting the territory boundaries.

Getting at the truth to improve performance

So how do you arrive at the unbiased facts behind the standard sales figures and see what action is needed to help a struggling franchisee improve performance?

Territory intelligence is the answer.  By this we mean overlaying information about your customers and prospects with demographic and geographic data. This will enable you to compare numbers across territories, accurately identify the profile of your ideal customers (consumer or business), view and compare the numbers and locations of customers and prospects in each territory, view franchisee base locations, compare travel distances and workloads, view competitor locations and so on.

Viewing this territory intelligence on a map immediately lets you compare territory performance against the actual sales potential within each territory. This will help you establish reasons behind poor performance – for instance, are there more competitors in some territories compared to others and how can these best be combated. If your franchisees travel to customers and/or prospects, can their visit scheduling be made more efficient and travel times cut. Is marketing being carried out in areas where there are most likely to be good customers?  

So when you’re wondering what to do about an under-performing franchisee, it will certainly pay off to gather territory intelligence to help you determine how best a franchisee can be supported to improve matters. 

Creating or Redesigning Franchise Territories

If territories have been designed or sold and the types of ideal customers and their likely locations have not been considered fully when creating territory boundaries, it’s never too late to look at them again.  After all, if franchisee performance is being impacted, the franchise may get a bad reputation if several franchisees fail and then it may prove problematical to sell territories in the future. 

Whether you’re in the early stages of franchising and considering how best to implement your territories or are an established franchise but think your territories could be improved, our free Franchise Territory Optimisation Guide sets out the factors to consider and gives guidance on how to design the most advantageous territories for your business.







On August 04, 2016
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