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What Makes A Good Franchise Territory? And What Makes A Bad One?

What Makes A Good Franchise Territory And What Makes A Bad One.jpgWhether you’ve been tasked with expanding a franchise at home or overseas, the right territories are essential to the success of your business. Choosing a territory with insufficient opportunities is much like trying to plant a garden in the desert. Optimal territories will make your franchisees more successful, and make your job of getting new franchisees a lot easier.

Too Large, Too Small

The myth that a large territory is the best territory is just that – a myth. It’s not the size of the territory, but the amount of target customers within it that makes the difference. Even the largest territory will struggle if it’s not well populated by your ideal demographic.

The same could be said of too-small territories. Although they may be easy to travel within, they may possess insufficient sales potential. Conversely, large territories can also have an excess of sales potential which no single franchisee could ever adequately service.

Geographical Barriers & Changing Boundaries

If your map is sprinkled with mountains, lakes or rivers between the territories you’ve outlined, you may need to look more closely. Is there one or more ways to cross these barriers easily? If not, your territories will need to be redrawn prior to being sold, or a new map of territories in a completely different location may need to be found.

There may also be changing boundaries to contest with. For example, dividing territories by postcode is a common way to map them. However, what if the Royal Mail decides to change their boundaries? The same is true when new construction takes place in a territory, e.g. the extension of a main motorway. Franchisee wars can be the result when territory boundaries become unclear.

Equal Business Opportunities

The best territories are not those that are of equal size, but that offer each franchisee an equal opportunity to succeed. The more of these territories that exist on your map, the more successful the franchise will ultimately be. An added benefit to mapping territories of equal business opportunity is that the performance of franchisees may be much easier to compare, making franchise management easier overall.

Room to Grow

In addition to looking at current conditions such as population (or businesses) and sales potential in a territory, one must also consider the future. Should the franchise grow, will its territories need to grow as well? With no room to grow in terms of territorial expansion, the entire franchise will suffer. The issue of customer spread must also be considered, and the pricing model allow room for it.

When selling a franchise territory, it’s important to consider that you will be asked about how you decided upon the location and size, as well as whether the territory’s conversion rate is acceptable. If your territories have good conversion rates and you can demonstrate they were chosen with care, a sale is far more likely. In the end, the right combination of customer numbers and demographics, along with room to grow and the right products, is what will bring success. The good news is that you don’t have to go it alone.

Learn How to Optimise Your Franchise Territories Now

Ultimately, the best franchise territory will offer an optimal balance of sales potential and geographic area. However, the task of mapping these kinds of territories can be a daunting one. When you have franchise territory mapping software on your side, however, you can act quickly and proactively to expedite franchise growth. If you want more information about how software can help you with territory identification, our free eBook can help. The Franchise Territory Optimisation Guide will reveal how software can help you realise territory mapping success, and it’s absolutely free when you click here.

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On December 09, 2016
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