Why Location Is Important for Your Franchise
Having a great product at a great price, establishing a reputation of providing quality service, and implementing a tried-and-true, data-driven market strategy are all essential components to building a successful business. But the old adage of “location, location, location” is true - even all these steps may not be enough if your business is not set up in the right place.
Not all locations are equal when it comes to business. What might be a great location for one company might be a poor location for another. This is due to a variety of social, economic and local factors that can affect different businesses in different ways. That being said, there are some general rules and guidelines that are worth being aware of in order to ensure you put all the odds of your franchise’s success on your side.
Location Equals Visibility
For retailers and restaurants, prime location means being in an area that experiences a lot of foot traffic. This makes sense, as in these types of businesses, the customer goes to the business.
However, for industries where the business goes to the customer - in the home improvement sector, for example - being in an area that experiences a lot of foot traffic will still improve the business’s visibility, but it is a significantly less important factor to the business’s success.
In the home improvement sector - remodeling, landscaping, interior decorating, etc. - high visibility is more a result of effective marketing rather than location.
Location Equals Convenience
Being located in close proximity to the customer is vital for businesses where the customer goes to the business - again, restaurants and retailers are a good example of this. In these cases, location equals convenience - always a good selling point for any business.
In the home improvement sector, where the business goes to the customer, convenience is more a result of an intelligently designed product and good customer service rather than location. Although, the closer you are to your customer base, the less time and money it takes to reach them and return again.
While you will still need to promote your home improvement franchise and your service as offering convenience, this important aspect of your business model is not completely reliant on location.
Location Isn’t About Place, It’s About People
This mantra is true regardless of the sector of activity, but it is especially true in the home improvement sector. As its name implies, a home improvement franchise can only flourish in a location where there are many homes - preferably lived in by the homeowners rather than tenants, as homeowners are statistically more likely to make improvements on their property than tenants or landlords are.
But it’s not enough to be in an area with many homeowners. The median income of the homeowners in a given location must correspond to the type of product or service the business offers. A high-end home improvement business will be unlikely to succeed in an area where the median household income is low. And the inverse is true in many cases, too.
Key Factors That Comprise a Great Location for Your Franchise
Suppose visibility and convenience - two pillars of a prime location - are more a result of marketing rather than a location for a home improvement franchise. What other factors need to be taken into consideration when selecting the right location for your home improvement franchise?
The Number of Homeowners in a Given Area
Not all locations have the requisite population density and the right ratio, homeowners vs tenants, to accommodate or justify the existence of a viable home improvement franchise. There is a considerable amount of statistical research that needs to be done to see if a given location has enough homeowners to sustain one, let alone, several competing home improvement franchises.
Income Level of the Residents
While a given location might have a high density of homeowners, that won’t do you much good if the majority of them cannot afford the product or service you are offering. On the other hand, if your franchise targets a budget shopper, you are likely to run into the same viability problem if you choose a location where the residents have a high median income, making your main selling point irrelevant.
Existing Competition Already Present in the Area
A good location is very likely to attract other businesses and other franchises. Naturally, by the quality of your product and the high level of customer service you provide, you should be able to carve out a niche for your franchise among the many competitors. However, your chances of success are greatly diminished when you try to break into an already over-saturated market.
Finding the right location for your franchise also means doing an exhaustive study of the existing companies already present in the area. This research should not consist only of competitors but also of auxiliary businesses in your field or businesses that provide a product or service that could potentially complement your own.
Establishing good relations with these types of auxiliary or complementary businesses is an important step in the marketing and sales of your franchise, as these businesses are often a good source for referrals and driving customers to your business.
The Trend in Demographics
It may seem like a daunting task, doing all this research about the demographics, median income, and competing and complementary business in the location. However, even that is not enough. It is also important to examine the trends in demographics to try and get an idea of what the location will look like 5, 10, or even 20 years down the road.
KTU Does Exhaustive Research to Match the Franchise Owner With the Right Location
There are many factors that go into choosing the right location for your specific franchise. All of the research and data points mentioned above should be provided to you by the franchisor. After all, they are the ones who should have the experience and know-how needed to select the right location.
At KTU, we select and distribute our territories carefully. Each location is researched exhaustively and vetted for current and projected viability. We review the relevant census data and project the viability of a franchise based on the age of homes in the area, the average household income of homeowners, and other pertinent factors. The territories we create from this research have an average population of 260,000 and a minimum of 41,000 single-family homes.
Each of our many franchise owners is given a territory, based on their wishes, that has been carefully researched and vetted and is ripe for a quality home improvement business. Contact us today to find out more about the franchise opportunities we have for you in an area to suit your needs.