One of the most critical decisions that can determine the success of your franchise business is your choice of location. Whether you are opening a new franchise or relocating an existing one, finding the right location makes all the difference. This article will take you through seven tips for finding the right location for your premises-based franchise business in New Zealand.
Research Your Target Market
Before you start looking for a location, you must understand your target market. This includes identifying:
- who your customers are;
- what need you are trying to fulfil for your customers; and
- understand their preferences.
You can use market research to gather this information, which will help you make informed decisions about where to locate your business. You may even wish to hire an industry analyst who can offer you bespoke market research.
For example, if your franchise specialises in high-end fashion, you will want to consider a location in a city centre or a department store. On the other hand, if your franchise specialises in fast food, you may wish to be located in a busy street or a shopping complex food court. By researching your target market, you will be able to identify the best location that meets your customers’ needs. If you’re offering a business service, you may wish to be close to an industrial zone.
Consider Foot Traffic
Foot traffic is an essential factor to prioritise when choosing a location for your premises-based franchise business. You want to be in an area with high foot traffic to increase the chances of customers happening upon your business. After all, the more people see your franchise, the more likely they will come in and check it out.
To assess foot traffic, you should consider the following:
- how many people pass by the location daily;
- the demographic of the people who walk by; and
- any major attractions or events nearby that will bring in more foot traffic.
Evaluate the Competition
You need to evaluate the competition before you choose a location for your franchise business. Opening a franchise in an area where there is already a similar business doing well may suggest that there is excess demand for your particular goods. At the same time, the risk in opening near a competitor is that you may saturate the market. To evaluate the competition, you can consider the following:
- To what extent there are any competitors in the area?
- If so, how well are they doing?
- How might you distinguish your business from the competition?
Look at the Accessibility and Visibility of the Location
Your franchise business needs to be accessible and visible to potential customers. This means you want to choose a location that is easy to find and get to. Ideally, customers should be able to see your business from the street.
To assess the accessibility and visibility of a location, you can consider the following:
- Is the location easily accessible by car or public transport?
- Is there ample parking available for customers?
- Is the location visible from the street, or can you implement adequate signage to compensate for this?
Consider the Cost
The cost of your franchise location is also an important factor to consider. You want to find a location that fits your budget and will not strain your finances. Keep in mind that the cost of the location includes more than just the rental payments. You need to factor in other expenses, such as utilities and insurance.
Look Ahead
When sourcing a location for your franchise, you should try and adopt a long-term perspective. Remember that your franchise location will likely be one of your most valuable assets. This means it is important that the location will work for you in the long term rather than being a liability. This includes considering if any planned developments in the area may impact your business. You should also assess whether the location will facilitate operations if your business were to grow quickly. To this end, you may wish to instruct a franchise lawyer and surveyor to evaluate the long-term prospects of the potential franchise site.
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Ask the Franchisor
Finally, you must work closely with your franchisor to ensure that you follow their guidelines and recommendations for choosing a location. The franchisor will likely have specific guidelines for the type of location they will approve. Such guidelines can be found in the franchise agreement.
You should remember that the franchisor will likely have years of experience operating a successful business, which means they will have learnt from trial and error which locations work best with their business model.
Key Takeaways
Whether you are opening a new franchise or relocating an existing one, finding the right location can make all the difference to your business’ success. Some key factors to consider when choosing a franchise location include:
- your target market;
- foot traffic;
- local competition;
- accessibility and visibility;
- costs;
- future-proofing your business; and
- the franchisor’s requirements.
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Frequently Asked Questions
One of the most critical decisions that can determine the success or failure of a franchise business is choosing the right location. Some key factors to consider when choosing a franchise location include your target market, foot traffic in the area and local competition. You also need to assess the accessibility and visibility of the location and the costs. Finally, the location you choose must allow for growth and meet the franchisor’s requirements.
You must work closely with the franchisor to ensure that you follow their guidelines and recommendations when choosing a franchise location. The franchisor will likely have specific requirements for the type of location they will approve. Such requirements can be found in the franchise agreement.
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