The Truth About Franchise Territories

Defining franchise territories in a way that’s fair and optimises your overall coverage can be a huge challenge for franchisors.

Thousands of factors can influence how you designate territories. And, the truth is – until very recently – you were probably doing it wrong.

But, advances in technology have made it easier to take a data-driven approach to franchise territory designation. This can help you make the process significantly faster and more accurate.

Find out how the old method stacks up against today’s location intelligence software.

The old method

You place a pin on a map in a spot that has some positive attributes and is far enough away from your other franchise territories.

Using this as a midpoint, you draw a circle around it to symbolise estimated drive-time or walking distance. You might even be able to use census data to get a faint taste of the type of potential customer that resides in this area.

If this sounds familiar, you’re not alone. But, with this technique – or a rudimentary digital equivalent – you’re still leaving a lot of revenue out there unclaimed.

These are some of the problems with this method:

  • Territories don’t tessellate: Shaping territories in a way that fits together is key to effective franchise designation. A circular radius may have some degree of accuracy, but will leave space blank. And, two postcodes might not include the same number of people.
  • Buyers know better: Both of these options are somewhat arbitrary and fail to take account of local geography or buyer behaviour. There might be a main road, river or other feature that prevents or dissuades customers from travelling to a branch that’s technically nearby, but difficult to reach.
  • Intelligence takes insight: You can take a more intelligent approach to both of these challenges, but you would need to do multiple complex equations for each potential territory. This will be a costly exercise, and the conclusions you draw may be out of date by the time you decide to act.

Defining franchise territories with location intelligence

Using location intelligence software can make this process faster and more accurate.

There are so many advantages to using location intelligence software for defining franchise territories. You can:

  • Create territories of bespoke shapes that slot together and cover all areas
  • Input your key customer demographics (based on age, income, daily routine and a range of other factors) and define territories with similar numbers of people who meet these criteria
  • Take account of local geographical features and input accurate travel times
  • Avoid disputes by providing proof that territories have been defined fairly
  • Process all the necessary calculations fast and log your findings directly on your own secure, corporate version of Google Maps
  • Use your interactive franchise map as a sales tool to help on-board new franchisees

Now that you know the truth, defining your franchise network will never be the same again. Integrate advanced location planning software into your franchise strategy and optimise your network for continued commercial success.

Discover all the factors that influence your franchise territories and integrate them into your business strategy with Periscope®.