Searches for likely new franchise locations will be more effective using territory mapping software, says Adam Melrose
When we talk about successful franchising, we are essentially talking about an increasingly complex system, because that is the overarching goal—continue to multiply offshoots of the legacy enterprise and ensure each of them replicates the original vision. No matter how methodological we get in our business infrastructure or how refined our processes become, managing a network fragmented across a vast geographical area, but unified under a singular brand name, will always be a great challenge.
Selecting the right location reduces this challenge considerably by limiting market vulnerability from the jump and proactively pinpointing areas with weak consumer density. Evoking interest in a new brand is much more difficult than capitalizing off of a pre-existing need, and for this reason franchisors benefit from understanding the consumer demands prior to breaking ground.
After deciding to expand into greater regions, franchisors are confronted by three options: hire a third party to vet the properties their franchisees select, be directly involved in the selection process and adhering to your own formulaic criteria, or automate the process with franchise territory mapping software.
Unfortunately, franchise location is a predicator of revenue stream. Selecting the wrong location impacts all parties involved; franchises are built to be self-sustaining through powerful branding efforts at the corporate level. Any store-level failures reflect poorly on the franchise system as a whole, jeopardizing the consumer following the corporation built from the ground up.
Taking a hands-on approach to your franchisee’s location selection process will inevitably allow your system to run more smoothly.
When dealing with a broad web of working parts, refined processes are paramount to the health of the whole. Franchises are largely process-centric, leveraging uniformity as a tool for quality control, and there is enormous benefit to extending that uniformity through to location selection as well. Adding a uniform system for location selection will ultimately foster a more cohesive model, whether you create uniformity through territory mapping software or manual geographic vetting.
Tap into what already works
The immense data pool available for territory research is a double-edged sword in that there is a plethora of data mining tools available, but you must then understand how to apply the data. Yes, franchisers could use the data to address obvious questions: What is the average income? What are the spending trends? How are the employment rates looking? What is the traffic and parking scenario? Does the building have good visibility from the road?
These questions only scratch the surface of territory mapping, minimally breaching pre-existing consumer behaviour and revenue projections. Although these tertiary concerns will give franchisors a jumping off point, they fail to address sustainability.
In 1790 the US government issued the first Census questionnaire, and from that moment on they have applied the demographics to everything from school zoning campaigns and road mapping to healthcare facility planning, and for the most part this system has prevented institutional failures. It only makes sense to leverage the same data in franchise territory planning, applying the same framework for decision-making as highway engineers do when they are determining where to build a new bypass.
Franchise mapping software applies big data compiled from the Census, proprietary databases and third party data sources, with geographical specifications. This software adheres to a custom selection algorithm, developing a personalized baseline to apply to all expansion moving forward. The Census data certainly addresses concerns beyond those basic questions, defining the market through population segmentation rather than through estimates. Operators have the capacity to zoom in on spending habits and understand how each micro-population would interact with their brand.
To address economical inconsistencies, territory mapping software analyzes historical paradigms to locate significant shifts and predict ones that may occur in the future. Perhaps, the medium income appears high and the average local seems to exhibit favorable spending habits at first glance, but when you zoom out over a five-year period, both measures are continuing a steady decline. Franchises require consistency, and do not coexist well with failing economies.
Geography matters
Not just foundationally, functionally. Franchise territory mapping software uses a Geographic Information System (GIS), a platform for understanding the natural features of the predefined landscape. GIS offers 3-D rendering of the territories which helps franchisers and franchisees visualize potential speed bumps: zoning laws, overlapping target markets, taxes and regulations.
By increasing spatial awareness, business owners decrease opportunity for profit loss and franchise cannibalism, which often happens when franchises fail to define functional territories. Users can easily identify market ‘hotspots’ and compile a list of gaps within various localities.
One of the most important functionalities of GIS and territory mapping software is the cumulative rendering. Once boundaries are defined and the algorithm is tailored to an individual enterprise, location selection transitions into a fairly hands-off process. Instead of being immersed in the process, business owners can view the territories from a customizable dashboard that receives GIS-transmitted natural boundaries, road networks, and analytics in real-time.
Let’s not forget operating costs
Find out exactly what others are paying for prospective real estate. This is an imperative to really get a handle on operational costs considering fluctuations in rent can make or break a bottom line. Territory mapping software outlines the respective ranges and predicts how they might look in a few years to prevent businesses from committing to a lease that will make it impossible to turn a profit. Obviously there are other numbers to input into this equation—tax regulations, business permits, and licenses—there are APIs to configure these as well.
Sure, some of those questions we discussed can be answered with some intensive research and manual mapping, but leaders within the franchising world often discover there are not enough hours in the day to complete the property selection and territory mapping process by hand. Inevitably there is an aspect of the operation that requires the attention more.
Franchises are multidimensional operations, subjecting all decisions to an individual and collective prospective. Ushering a legacy system of property selection and territory into an era of automation and predictive planning will allow more for risk-adverse decision making. There is a myriad of potential roadblocks for franchises, but territory mapping does not need to be one of them.
3 Reasons to Check Out Territory Mapping Software
1) Tapping Into population segmentation databases
2) GIS mapping integrations
3) Understanding operating costs
ABOUT THE AUTHOR
Adam Melrose is a franchise and retail technology enthusiast and National Account Manager at Chetu Inc. As an experienced leader and communicator, Adam offers commentary on the changing tides within the Retail landscape, sharing predictions on how emerging technologies will rattle the pre-existing system. Chetu is a custom software development, integration, and implementation services provider serving start-ups and SMBs to Fortune 500 companies in 25+ industries including franchising. Chetu specializes in franchise management software, franchise intranet programming, franchise territory mapping software, and CRM software. https://www.chetu.com
