Mapping out franchise territories is one of the most critical decisions you make in this relationship called franchising. As a franchisor, you are working to develop territories that meet the needs of the franchise, but without losing potential customers and revenue opportunities. The franchisee, on the other hand, is working in dream mode. This person is establishing his or her own business that is the key to their future income – so understandably, they want the biggest piece of the pie as possible. The trick is to find a working solution that benefits both sides. Consider five tips that help make that happen.
A Little About Franchise Territory Mapping
Put simply, franchise territory mapping is the establishment of boundaries that each individual franchisee works as part of the franchise agreement. The allocation of boundaries assigns geographical areas with each license and usually data that defines the target market in that region.
By mapping out the territory, the franchisor defines the various regions to prevent overlaps and conflicts. This provides franchisees with clear guidelines to what areas they can work and what areas are out of bounds. It is not an easy process, but it is an essential one. Done right, it fulfills the needs of all parties, but how do you get there?
1. Do the Homework
It is critical that you understand the demographics of each region and the unique customer target profile for each business. A business selling jogging shoes will struggle in a demographic comprise of mostly seniors, for example. It is not easy to know what the demographic profile is for an area, though.
Use surveys to help define both the area and the needs of the franchisee. Start by surveying franchisees leaving a territory to find out more about their sales trends and targets. Talk to other companies in different industries working that area, as well, to see what their sales profiles look like. Organize all that data to create a profile and match it established demographics in the area to get a complete picture of the sales potential.
2. Be Strategic
One of the goals you hope to achieve by mapping territories is to avoid conflicts among the various franchisees, especially if you work in more than one industry. If you put two identical franchises close to one another, you create potential conflict and end up losing one of them.
Create a working strategy for assigning these territories that allow both parties to pursue their interests without stepping on each other toes. That is where tools like location mapping software will come in handy. Automating the site selection allows you to make smart territory assignments.
3. Understand the Businesses Minimum Performance Requirements
All companies have a minimum amount of business necessary just to keep the doors open. There is no set formula that makes this clear, but you can look at a number of factors such as the business plan, estimated overhead and analogous stores. Add in some gut instinct, too, and you can get at least a good idea of whether a business can survive in a given territory.
4. Establish Marketing Criteria
It may not be necessary to define marketing rights for each territory, but you need to know the rules before doing the mapping. For that matter, consider if franchisees can go outside their territories for any reason. Establishing rules will make assigning territories a more straightforward process, especially as the business grows. Down the road when you take on new franchisees, you will already have a playbook in hand.
5. K.I.S.S.
Keep it simple will almost always make sense in business because complex strategies just over complicate the process. This is not easy to do when creating the territory structure for a franchise, though. Decide going into it that simple is better. As you set-up the territories, simple is what will help you avoid confusion and complex negotiations that end up costing you money and future revenue
As a franchisor, your job is to make logical choices for franchisees and to develop territorial rights that serve everyone. Not an easy task, but with the proper tools like franchise software, you can master it. Once you establish base areas and define primary demographics, you have all you need for successful franchise territory mapping that makes money and creates opportunities for all parties.
