Location is Key in Traditional FranchisesAs any restaurant franchiser knows, one of the foremost keys to business success rests in the tried and true adage: location, location, location. Detailed demographics studies and site criteria, including population density, proximity of competition, space and rent, help restaurant franchisers and their development agents to identify prospective locations intended to support their franchisees’ long-term success.
The opportunities for expanding locations outside traditional shopping centers and stand-alone unite are endless. Whether looking into opening satellite units in gas stations, schools, theme parks, military bases, discount store or even Laundromats, the benefits of these non-traditional locations remain the same.
Non-traditional sites offer restaurant franchisers a wealth of growth opportunities among existing and untapped customers. These satellite units in existing businesses enable franchisers to establish themselves in new markets where there are captive audiences – with built-in traffic and oftentimes less competition. Furthermore, they provide a testing ground for the introduction of a brand to new audiences while increasing awareness of the brand among existing customers. Consumers benefit from convenient, one-stop shopping that keep them shopping longer, often leading to increased incremental sales for site operators. In essence, non-traditional sites bring franchises to the people, rather than waiting for the people to come to the franchise.
While the opportunities for non-traditional franchise development are endless, franchisers should establish criteria for evaluating these types of locations and ensuring long-term success. First and foremost, there should be synergy between the franchised brand and the existing business as well as proven traffic flow and existing sales volume. For example, when evaluating the feasibility of opening a satellite unit in a gas station, franchisers typically look at the volume of gas pumped per month, the volume of inside sales for convenience items, the proximity of the station to heavily traveled thoroughfares and the size of the area available for build out. If the numbers meet your minimum requirements, for example 150,000 gallons pumped per month and $80,000 in monthly sales, the location is right for you.
Because of their size requirements, non-traditional locations often require less capital expenditure to build out than storefront locations in shopping centers or stand-alone units. However, franchisers should pay particular attention to lease negotiations where rent is based on a percentage of sales. In these instances, profit margins may be significantly compromised. Furthermore, there are instances where the owner/operator is the franchisor, in which case there is no lease. In all matters relating to lease negotiations and site selections, legal counsel should be sought.
Subway Development Corp. of Washington, D.C. (SDC), one of the nation’s largest developers of Subway® franchises, has experienced tremendous growth since opening its first non-traditional unit at a BP gas station in Franklin, Va., more than 10 years ago. Today, non-traditional units, including locations in the Pentagon, theme parks, military bases and the Virginia school system, represent approximately 10 percent of the company’s 740 stores in Virginia, Delaware, Maryland and the District of Columbia. By blanketing its region with traditional and non-traditional locations, SDC is able to provide its services to more people, more often.
If you would like a successful franchise business without having the hassle of finding a good location that customers will want to keep coming to, consider WSI. Their franchises don’t need a physical location at all, just a computer with a dependable internet connection. WSI, headquartered in Toronto, Canada, is ranked as the #1 Internet Services Business in the world and the 4th fastest-growing International Franchise. They have systems that have been developed, utilized and proven by over 1500 Internet Consultants in 87 countries worldwide. Visit www.wsicorporate.com for more information.
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