The real estate adage “Location. Location. Location.” is just as true for businesses as it is for homes. The location of your business affects everything from customer access to supplier relations to how much you enjoy the daily commute.
With that importance in mind, let’s look at some aspects to consider when choosing the right location for your new franchise.
What Type of Franchise are You Buying?
Different businesses have different needs when it comes to location. Some require a strong customer presence, and some can actually benefit from being a bit off the map.
If you’re a retail establishment or restaurant, your customers need to easily be able to find you. But if your franchise is based on services conducted outside of the office such as plumbing or cleaning, a location away from bustling city centers can be beneficial as you cut costs like rent and signage. Many businesses can even be run from home, saving you even more.
Understanding your industry and your needs is the first step in selecting a location, along with understanding your business’s place in the community.
The demographic makeup of an area includes factors like the average age of the people, their median income, and the availability of resources such as schools, shopping, and transportation. Understanding the area means learning how these different parts of a community feed into each other.
A fast food franchise near a college campus might make more sense than a pricier fine dining restaurant. Similarly, a child-friendly restaurant may work best near a shopping mall rather than an industrial park. The demographics will help you gauge how well your franchise will fare in the area, who your customers will be, and from what other establishments you can benefit.
Is the Space Accessible?
If your business relies on customers coming into a brick and mortar location such as a retail store or restaurant, then accessibility should be a top concern. If you rely on walking traffic, are there other attractions within walking distance that will draw people to the area? If you expect most customers to drive, is there ample parking? Accessibility can be the reason a customer chooses you over the other guy.
Sometimes accessibility comes down to something as simple as which side of the street you’re on. Paying attention to traffic patterns on your city’s axial roads can help you grab customers as they drive. A coffee franchise might do better on the side of the street that leads toward a business district, catching people on their way to work. A casual dining restaurant might work best on the opposite side, so they pass you on their way home.
Accessibility is all about ensuring that your customers can find you easily every time. No matter how much they like or value your business, if it’s difficult to access then they might just go to the competition. Speaking of which…
How’s the Competition?
Have you ever noticed how multiple types of fast food franchises tend to cluster together? It’s not unusual to see a burger joint next to a taco shop next to a Chinese buffet. While it’s easy to assume that having your competitors right next door would be a hindrance, that might not necessarily be the case.
As Greg Kahn, founder and CEO of Kahn Research Group, who’s done location research for Arby’s, Subway, Home Depot, and others told Entrepreneur, “Quite simply, the best place to be is as close to your biggest competitor as you can be. By being in close proximity to your competitors, you can benefit from their marketing efforts.”
When similar businesses set up near each other, they create an area that’s easy to remember for customers and options that keep them coming back. So, while you may not want to look out the window every day and see the goofy grin of your competitor’s mascot, it just might be helping your business.
Other Issues to Consider
Choosing the right location for your franchise isn’t just about how the customer sees you. It’s also about how regulations, zoning, and area costs will affect your business. Some additional aspects to consider are:
- This can be one of the single biggest expenses for any business.
- Is the area you have in mind properly zoned for your type of business?
- Different jurisdictions have different tax obligations that can affect your bottom line.
- Wage laws. Similar to taxes, wage requirements differ from location to location and should be taken into account as you plan for ongoing expenses.
As you use our franchise business search tool to find your next opportunity, consider which location will work best for the type of franchise you choose.