As a commercial broker I talk with retail companies often. I have a unique insight from all sides of franchise development from the tenants to the real estate directors. One of the issues I see most often is a recent migration to more hands-off model by real estate directors. This predominantly digital processes can yield some real issues in regard to how territory lines are drawn. The goal of a franchise owner is to make the most deals/sales they can in their given area. Franchise owners want to be set up for success and don’t want to compete with other franchise locations. Many companies use analytic driven software to create territory lines, these software programs use this data to create what often amounts to arbitrary lines with no concept of the local market conditions. This is why we see failed rollouts and franchise locations that fail a year in. WE say it all the time because its true, local knowledge is absolutely key to successful site selection.

Recently, I had a discussion with a fitness franchise about new locations and assisting with site selection. They sent me their mapping software data and with one look I told them a few of these lines won’t work. Shocked, they asked why? I began listing the reasons, but we will focus on one example. One of these territory lines was split down the center of a retail corridor. The southern franchise territory had their viable deal making area cut by 50%, while the northern territory which had its own retail corridor was eating into this southern deal making zone. The mapping software had drawn arbitrary lines and created competition where none should exist. It also placed sites in locations where they didn’t really want to be after a quick overview of the current market conditions in those corridors.

So how can these types of issues be avoided? One solid way to ensure healthy site selections and profitable franchise territories is to always include local expertise and knowledge before finalizing deals. The local, boots on the ground experts understand the market and will help inform decisions in a way no software program ever will. In addition, utilize radius restrictions versus territory lines. Radius restrictions create models for success that tend not to overlap and allow for a larger area to source deals/sales. Then consult on where the sites for these franchise locations are best positioned to maximize the opportunity for success. The extra time spent and real-life expertise means more successful franchisees, and that equals growth for the company at large.