7 Site Selection Secrets For Multi-Unit Franchisees
by Barsha Bhattacharya Business Development 05 December 2023
Opening multiple franchise units requires careful planning and analysis to choose optimal locations. Site selection is a high-stakes endeavor that impacts the long-term success and profitability of each new unit. The competition for prime commercial real estate continues to intensify across retail, restaurant, and service industry segments.
In this article, we will explore seven key site selection secrets that multi-unit franchisees should leverage to make fully informed decisions about expansion sites.
KEY TAKEAWAYS
· Research population growth and demographic shifts to evaluate future customer demand around potential sites.
· Look beyond just traffic volumes to understand flows of destination customers versus pass-by traffic.
· Ensure site attributes like size and access points adhere to franchise brand standards and prototypical criteria.
· Assess both direct and indirect competitors around locations to inform positioning and localization decisions.
· Leverage geospatial mapping tools and costs to model sales projections for prospective trade zones, while managing relationships with key players.
1. Think Long-Term About Market Demographics
When entering a new market or say you want to scale your business into a multi-unit office space franchise, for example, franchisees need to research not just current population statistics but also projections for years into the future.
By understanding anticipated population growth, generational shifts, and other demographic changes, multi-unit operators can evaluate both existing demand as well as future customer potential. Census data and projections from state and regional planning authorities provide views into expected population growth and decline across geographic districts.
Ongoing residential and commercial developments that are already planned will also impact customer volume and traffic flows. Franchisees should factor in announcements for large planned community construction or infrastructure upgrades that will reshape a trade area over time.
2. Analyze Traffic Patterns Thoroughly
The volume of foot and vehicle traffic passing by a potential franchise site seems like an obvious consideration, but multi-unit operators need to dig deeper into traffic flow analytics. What matters is not just total traffic numbers but whether they represent destination volume rather than pass-by traffic.
Sites located amid bustling mixed-use town centers will naturally benefit more from high volumes of passersby compared to standalone pad site locations along highways. Existing infrastructure factors also play a role, such as analyzing whether current road networks and access points can support additional development.
Will future public transit routes or road improvements open up better access? Following announcements for enlarged capacity at nearby bridges, underpasses, on-ramps or new highway interchanges can identify sites poised to benefit.
3. Choose Sites That Align With Brand Standards
While assessing market demand is crucial, franchisees simultaneously need to ensure site attributes align with their parent company’s guidelines. Elements such as location type, trade area demographics, site dimensions, parking capacity, visibility, signage opportunities, and site access must adhere to prototypical standards for that brand.
For instance, a Main Street storefront location that works perfectly for a boutique retail franchise may not translate for a quick-service restaurant chain that relies on drive-thru access.
Similarly, an urban street site with limited parking would not match the requirements for a big box automotive franchise that needs service bays, wider turning radiuses, and queue lines for customers. By clearly understanding franchisor site criteria upfront, multi-unit franchisees avoid wasting time evaluating non-viable properties.
4. Assess The Competitive Landscape
In conjunction with meeting brand standards, franchisees need to carefully evaluate their competitive landscape around potential expansion sites. Assessing the strengths and weaknesses of both direct and indirect competitors will provide advantages in positioning and localization decisions for each unit.
Marketplace saturation also plays a role in attracting enough customer demand to sustain profitable operations. Opening an additional sandwich franchise across the street from two existing sub-shops with similar menus and price points may struggle to capture business unless the area is dense with office workers.
Evaluating co-tenancies within the same shopping center or mixed-use development is also wise to identify overlapping customer bases between complementary brands.
5. Leverage GIS Mapping And Analytics
Advanced geospatial information systems (GIS) tools enable sophisticated analysis of trade areas based on drive times and customer density mapping. By geo-fencing neighborhoods and districts by certain key demographics such as income levels, age ranges or household sizes, franchisees can zero in on prime clusters for expansion.
Existing unit sales data can provide models for ideal demographic segmentation to guide additional site selections. Predictive analytics and location modeling software also facilitate evaluating prospective trade zones and sites.
Buying pattern data and customer visitation frequency derive statistical models for sales estimation based on analogous sites. These projections build confidence for franchisees to quantify potential return on investment from new unit openings.
6. Evaluate Incentives And Cost Considerations
When exploring opportunities spanning different communities and development sites for multiple franchise units, the economics and costs of each location differ dramatically based on municipal jurisdictions. Savvy multi-unit franchisees assess the varying incentive packages, utility costs, tax policies, permitting processes, and construction variables across target expansion markets.
Negotiating allowances like free rent, landlord contributions for build-outs, and signage will also benefit the bottom line, especially helpful for opening several new stores in close succession. Comparing the costs of permitting, licensing, and inspections across municipalities also impacts budgets. Analyzing these key economic factors facilitates choosing communities where multiple franchises will reap the greatest advantages.
7. Build Relationships With Key Players
Successful and seasoned multi-unit franchisees cultivate connections with commercial real estate brokers, economic development officials, civil servants, and existing franchisees across their expansion ecosystems.
These relationships feed valuable market intelligence for available properties, new construction planned, regulatory changes on tap, and performance metrics from existing operators.
Tapping insider knowledge from fellow franchisees already operating in a target region provides extremely helpful consumer data. Existing multi-unit players also serve as mentors for navigating expansion within that regional market, sharing best practices from their growth journeys.
In A Nutshell…
Committing the research, analysis, and relationship building across metrics ranging from demographics and traffic counts to policy incentives and geospatial mapping will lead to the very best locations for additional franchise outlets. With plenty of competition in commercial real estate, following these secrets will pay dividends for years to come.
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