Franchise business is about location. Why? A recent post on Forbes cites that location is the first three keys to successful franchise. In franchise industry, which combines online and brick-n-mortar components, real estate site has a great power to determine the success or failure of a business.
Securing the right location is crucial for the success of both the franchisors and the franchisee. The franchisors have a duty to educate the candidate franchisees on how to find the right site for the business. The following are some tips to find the right location as one of the keys to successful franchise business, as suggested on Forbes.
Keys to Successful Franchise Business: Location First!
Define the Criteria
Choosing the right location is crucial since the first time the franchise business is launched. Why? Imagine a situation, in which an emerging franchise has to compete with established names. If the emerging franchise chooses a bad location, it may imply a doom for the business. Building the brand will be a challenging task. In the early stage of the business, even a small mistake can hurt the franchise badly.
This may sound like an exaggeration, but it may be true for some reasons. Therefore, the franchisors need to define certain criteria for the location standard. For instance, you may define that a franchisee has to choose a real estate, which has at least the following:
- Ideal square footage
- Enough parking space
- Standard frontage, and so on.
Do not settle with a single site. You may find that a location is good for now. However, it must be noted that real-estate acquisition process keeps changing. You need to get in line with the system. Do not simply choose a cheap site. Make sure to do a research and find out why a site is cheap and available all the time. Learn any possibilities, as the may determine whether your business is going to succeed or fail.
More importantly, no single site fits all businesses. For instance, a souvenir shop may be suitable only in tourist center, but an ice cream stall may have more options of location. Many franchises are concentrated around shopping centers or supermarket. However, that is not always the case. Therefore, make sure to do in-depth research to find out what makes an ideal location as one of the keys to successful franchise.
Size Does Not Always Matter
A big building is not always better than a smaller one is. Building a smaller one but in consistent pace is more important than simply focusing on the size. A size may have significant impacts on many aspects like rental costs, utility bill, and other operational costs. For an emerging franchise, operational costs can be burdensome.
In other words, you need to understand economics of the size, whether it significantly influences your business or not. If the size does not contribute much to sales, a compact one may work better, as you can reduce the operational cost. So, location is one of the keys to successful franchise and the franchisor is responsible to make sure that the business is located at an ideal place.