Location Analysis and Territory Planning for Franchise Systems

Location Analysis and Territory Planning for Booming Franchise Companies

Franchising systems have proven to be extremely crisis-proof and are booming like never before.

The approximately 930 franchisors in Germany generated around 135 billion euros in 2020 according to the Deutscher Franchiseverband (German Franchise Association).

According to a study by the Österreichischer Franchise-Verband (Austrian Franchise Association), in 2021 there are currently around 500 franchise systems in Austria that have recently turned over a total of 10.8 billion euros at 12,000 locations. That is a record. Nevertheless, the industry continues to grow: 74 percent of the franchise systems are expanding.

But growth does not happen on its own.

Both the decision about assigning territories to franchisees and those for individual new locations must be made wisely, without investing a lot of time and resources in location analyses. This is exactly what the Geomarketing-Software from WIGeoGIS allows you to accomplish.

“Without the tools from WIGeoGIS, franchisors do not have access to crucial data and have to make their location decisions based more on gut instinct, which can work, but might not. Wrong decisions are more likely if you work without the WIGeoGIS system.”
Waltraud Martius, Managing Director Syncon Consulting GmbH

Define target areas for the franchise territory assignment

In franchising, a franchisee is usually assigned a target area: Only that franchisee is allowed to open locations in that area. These areas can be limited to individual districts or ZIP Codes or can include entire federal states or countries.

Before assigning a territory, it is worth checking the region you are considering:

• Is my target group sufficiently represented there?
• Is there fundamental potential for my franchise system in the region?
• Does it make economic sense to open branches there?

You should therefore analyze your target areas with WIGeoLocation before you start searching for specific locations and franchisees.

Example: You are a German franchisor in the fitness sector and your offer is primarily aimed at young men with low purchasing power. You want to assign the first franchise branches in Austria. It is important for you to be close to universities, bars and public transport.
With WIGeoLocation, all it takes is just a few clicks to find the regions where these parameters are given and where your target group is particularly well represented. You can also see which areas you should avoid, because mainly older people with high purchasing power live there.

Tip: You can also invite your franchisees to take a look at WIGeoLocation with you and discuss the advantages and disadvantages of different target areas together.
Kurzbeschreibung des Inhaltes (für leichtere Auffindbarkeit): Location analyses and territory planning for booming franchise companies + define target areas for franchise territory assignment

Identification of White Spots

If you already operate locations in a region and want to open more, a white spot analysis can be useful to determine:

Where are there still promising white spots within your network?

Example: You have assigned 15 franchise branches in Switzerland and you want to add three more. First you define the catchment areas for the existing branches: For example, your customers should be able to reach your locations within 15 minutes by car. This will reveal all those areas on the map that are not covered by any of your branches. You can now analyze these white spot areas more precisely with regard to your target groups.

This allows you to see at a glance where there is further potential for your franchise system.

Picture: The white spots of a franchisor in Switzerland were determined on the basis of market potential and competition. The next steps are to determine the franchise territory for the contractual partner and to define delivery areas.

Define delivery and catchment areas quickly

Even within the contract territories assigned to franchisees, our geomarketing tools can be used to divide them into catchment or delivery areas so that your customers are optimally supplied.

Example: You are a fast food provider with a focus on delivery and guarantee that from the time the order is placed the food will be delivered within 25 minutes. Enter your locations in WIGeoLocation and define each of the catchment areas as 15 minutes, allowing 10 minutes for the preparation and packaging of the food. Now you can see the areas where it is possible to deliver within 15 minutes and where you need a better solution, such as assigning part of a delivery area to another branch or opening a new location.

Rule out cannibalization

If locations are too close together and their service areas overlap, they can take business away from each other. This cannibalization can easily be avoided with a timely location analysis.

Concrete Location Analysis with Individual Location Reports

A positive, quick location check is followed by a more in-depth location analysis. With WIGeoLocation, this is particularly fast, convenient and customizable.

“An individual location analysis is performed when a location is relatively certain and you want detailed information about it.”
Martin Ortner, Senior Consultant at WIGeoGIS

Example: You run a pizza franchise chain and are looking for locations near housing estates in which mainly families with medium purchasing power live and where there is good access to public transport. We configure the software for you to identify precisely these requirements and from now on you can perform as many location queries as you need.

In just three steps (enter the location, define the custom catchment area, create a report with a single click) you will receive an automatically generated location report for each location, that evaluates the exact criteria that are important for your location decisions.

You can make the location reports available to your franchisees so that they can reduce the risk of their investment or apply for a loan from a bank.

Picture: The necessary key figures are collected individually in reports for each catchment area. This process takes place automatically within just a few seconds. The reports can include a variety of relevant data.

Controlling and Benchmarking

A location analysis is not a one-way street: Not only can you extract data, but you can also enter data yourself in order to gain insights for your business.

“For controlling and benchmarking, I particularly recommend integrating more of your data into the system.”
Marcel Kirrmann, Consultant at WIGeoGIS

Then questions like these can be visually represented in the geomarketing software:

• Which of my franchise areas and locations generate the most and which generate the least?
• Which locations already achieve my goals? Which locations do not?
• How much is ordered where?
• Which branches deliver the fastest? Which are the slowest?
• Where does direct mail bring the most revenue?

The software shows you clearly on the map in the form of small and large dots where your franchise partners achieve their goals and where improvement is needed. This clearly shows when you have a north-south, east-west or urban-rural divide in your sales.
On the basis of this controlling, you can also determine where change is needed. Maybe one location is more suitable as a pure delivery branch, while another might be able to accommodate several more seats.

“In terms of benchmarking, we can define a sample location with you in the location analysis software that you can then use to analyze and compare locations. In this way, you are constantly learning new things for your new potential locations.”
Marcel Kirrmann, Consultant at WIGeoGIS