Anyone operating a retail franchise company would recognize that franchise location selection is an absolutely critical factor in how effective the business will be able to perform. Whether it is a service franchise or a fast-food franchise, a very careful location analysis is required for the business owner. To this point, in this article, we are going to introduce important factors you need to keep in mind when selecting a franchise location. In the end, we will also provide a franchise site selection checklist for anyone after opening a franchise business.

Why Is Location Important For The Success Of A Franchise?

Location, Location, Location! This is a common phrase you will hear anywhere, and although it simply repeats a common word, it conveys so much meaning. Most recognize this usage because it is an important part of, well, anything in a franchise.

Location = Functionality

This applies to all businesses, no matter what industry. How do people be a frequent buyer of your franchise when they cannot find it? How do people give you business if it is hard to get to your store? Generally speaking, the easier you are to see, the more accessible your car park, front doors, etc., the more business you get.

Choosing the Right Location for Your Franchise

There are a few factors in relation to your franchise that can make or break you and the location is definitely at the top of that list. Locating your franchise in the wrong place can cause it to fail by itself, no matter how many other things you do well. Before talking about the franchise location selection checklist, here are some ideas on how to choose the best location for your franchise.

Understand The Concept of Your Franchise

It is helpful to fully understand the concept of your particular franchise before you go about selecting a location. The target customer is the centerpiece of the concept, so profiling your target customers, where they live and work, where they play and how they play and what drives people into the business, is very important.

Once you understand the concept of your franchise and target customer, the factors that go into choosing a good location are easier to understand. You would not put a pricey, trendy boutique of clothes in the inner city any more than you would put a thrift store in a suburban mall. If you want your franchise to be successful it is important to match the concept to the location.

Research

The next step of choosing the best location is to do a full research in the area. Some important considerations when looking at a possible location for your franchise are as follows:

• How easy is it to get to (and park in) the location? Can traffic from both sides of the street turn into the spot, or does a median block access on one of the sides? Is it a remote location? Is it visible from heavily traveled areas?
• Which similar businesses are close by, and is their location advantageous compared to yours? Just because there is a business like yours nearby, it doesn’t mean yours cannot be successful, but it can make it harder to get the market share you need to gain profit.
• Find out what short-term construction projects are planned in the area. If a similar business is to be built in the same area soon after yours, that might not be the best location for your franchise to move into.

Negotiate a Favorable Contract

The terms of the contract can be confusing and tricky for the location you want for your franchise. Having the franchisor’s and/or their legal team’s help can prevent mistakes that could cripple a new franchise. If favorable conditions for a particular location can not be agreed on, it may not be the right one, even if all the other conditions appear to be perfect.

Be in Contact With Your Franchisor

Having a strong relationship with your franchisor is key to selecting the right location for your business. When it comes to selecting real estate, each franchise has its own rules and regulations. The details you need to remember is written out in the disclosure document of the franchise. Reviewing this information with your franchisor is always easier than combing it yourself through the 100-plus page document.

Plus, you will already have full market research data at your disposal, that many franchisors have conducted instead of you. Keeping track of demographics is in their best interest and they will share the data with you. Renowned franchisors would be able to tell you how the company has performed in various regions, which can be helpful when you explore potential locations.

In some cases, the franchisor will accompany you on a tour day to choose a site, which will focus on showing the franchise partners exactly what type of property will work well for the business.

Sign the Contract With Professional Supervision

The next step, after you have found the best location for your franchise, is to close the deal under professional supervision.

In the final negotiations, a reputable franchisor will offer support including carefully examining provisions on lease extensions and unexpected hikes in rents. Nonetheless, hiring your own attorney to review the lease is still recommended.

Franchise partners tend to overlook a number of factors in the final stages of securing a location. For example, if the air conditioner has to be replaced and the landlord expects the tenant to cover the costs, a new franchise partner may be required to pay major fees before the business is even opened.

New owners should know that every space has its own problems. Franchisors need to train franchise partners on what to look for when it comes to costs. Fixing some issues are more expensive than others, such as mold remediation or building structural problems.

The bottom line for new franchise partners, regardless of the size of their space, is not to depend on the emotional, gut-feeling type of decision: “I just know this location will work!” Alternatively, you must consider a logical and systematic approach while selecting the right location for a franchise. And while site selection is not a science, it is all about finding the location that will work best in the months and years to come for you and your business.

Considerations When Selecting a Location for a Franchise

Recognizing the major traffic patterns, utility costs, rent per square foot, and many other aspects are just a few of the factors to consider when locating your franchise location.

Franchise site selection is of utmost importance because it usually involves heavy investment in a single location, often with lease agreements that bind one to the selected site for a period of 1-10 years. Therefore, if you sign a contract and spend the necessary furniture investment and outlet design, you will be tied to the location for a long time and can not move that easily and quickly.

It is also very important to decide on rent. Typically when franchises are launched in malls or strip malls, the problem of timing comes into play. The operations of your franchise are bound to the timings of the mall and you must abide by them otherwise penalties will be imposed. So when you are looking to open your franchise in a mall, you should make sure you can work in certain hours and meet their schedules.

Connection to suppliers and consumers is also an important factor in the franchise site selection checklist. Customers should be able to have quick access to the location, because they may not want to be frustrated in the process of trying to enter your establishment. That means you need to make sure that your franchise is in a safe area, people have access to nearby parking spaces, they do not have to worry about their vehicle for a period of time, the franchise should be easily visible and should not be around the corners or have secret entrances that make it difficult to get into the franchise.

Similarly, the more difficult it is for the franchise to have its hand on the supply, the higher the cost of the goods is going to be. For many fast-food franchises, the food is delivered to the franchise early in the morning but if your franchise has no parking available for larger vehicles and is extremely out of reach for the supplier, then you can often experience poor delivery service and are often overcharged for the services rendered. The customer should be considered however, when choosing a location, the suppliers’ demands should also be weighed in.

Service franchises often do not face that much trouble when going through a location selection process because they do not have such expenses tied to their location and can easily be relocated. These businesses can be operated from home as people are performing the primary service and those people can work from anywhere.

However, it should be seen that access to the location is not too far for the professionals and employees. This factor is also common for the product franchises so the manpower concern should be considered when selecting a location.

Franchise Site Selection Checklist

There are plenty of variables in deciding the location of a franchise. The practice of selecting a location is similar to a combination of art and science. Many old-time real estate agents do not believe in demographic research and feel you need to “smell the earth” to make site selection very successful. However, we know that this is not the case anymore. Below, you can read useful information on selecting a franchise location followed by a franchise location selection checklist.

Easy Access to the Home of the Franchisee

You as a franchisee would want to work with a relatively easy commute. Why buy a business, then have a 60-minute commute everyday? There is nothing more frustrating for a franchisee than being forced to drive through heavy traffic or 60 minutes to respond to a police/fire alarm at 2 AM. At this point, changing your home would be an easier process than moving your franchise. Buying a franchise is an event that will change your life. That commitment could and should include moving to a better location. The first step in choosing the site is driving in the area you are currently living and shopping, and search for ‘FOR Sale’ signs.

Non Too Large, Not Too Small

Look for locations according to the 5 years Pro Forma that suits the size and rent. The high rent of too big of a location will cut profits deeply, too small of a location does not allow the right space required to produce the potential business profit.

Demographics to Say NO Instead of Yes

A very successful location selection requires time and effort. A bad location always deserves a big NO. Do not compromise on a location just to open up a unit. Lots of sites on paper will look good but it will be a disaster once visited.

The Location Selection Walk

If your demographic analysis suggests that a location visit is worthwhile, be prepared to go there walk (and drive) to the site.

1. Drive to the location: Is the site accessible on both sides of the road? Can I access the site from both ways? Is it possible to take a left turn?
2. Traffic: During busy hours, does the traffic go the right way? Coffee needs big traffic going to work, and large traffic coming home from the work is ideal for takeout.
3. Can the Location be seen from the road? Drive-bys will be an integral part of your client base. Customers get into the car, driving to find a place to eat and drink. This patronage will dramatically increase with the help of great visibility of the roadside.
4. Is there good signage and clear direction to enter? GPS can bring a prospective client close to you, but not close enough to get in the front door. There is nothing more frustrating than being in the “you have arrived according to your GPS, but you cannot find the place anywhere” situation. Ideally, you have to have great roadside signage, monument signage as the customer progresses to the site, and finally, on the front of the unit, there must be a big, lighted brand sign.
5. Walk to the location: Is it clean? Are there any vulgar Graffiti signs? Decays? Potential liability problems? Potholes in the car-park? Do dumpsters stand in the right position? Is there an unpleasant smell? No-one wants to eat anywhere with a fertilizer factory next door.
6. Does the front door face the street? If you cannot find the entrance, you cannot get inside. Sounds stupid but locations are going to have doors on building sides, not the front.
7. Are there plenty of glass at the front of the building? Potential customers would like to be able to take a look inside. Is it clean? Are there many customers inside? Is the location warm and encouraging? Make sure your glass gets plenty of sunlight. You would want overhang but inside the roofline, you don’t want to be too far to limit our visibility. The exception to this rule is if you can have outside seating all year round.
8. Parking: Make sure to provide 2.3 spots per table at your restaurant. “Meet me in the restaurant” groups with 3 friends and 3 cars need sufficient parking.
9.  Left-hand turn. Make sure that there is an easy access point. Taking a U-turn or trying to cross two lanes is rather difficult. Look for traffic lights to assist entrance.

When you are in the process of researching for any franchise business, always ask the current active franchisors about their real estate experience when they were starting out. Ask them about each of the above-mentioned factors, and find out if they had any other unforeseen problems or issues that they had been blind-sighted by.

Finally, make sure that you find out how long it took for them to finish the whole process from start to finish and whether their time frame was normal and was able to meet their expectations. Fully conducting this type of research takes a great deal of time but when you decide to become a franchisee, you will be armed with the knowledge you need to avoid unpleasant surprises on your path to be able to bring your franchise to its potential success.