Article was published on Expert Advice page, Business Franchise Australia & New Zealand Magazine Sep/Oct 2013 and Franchise Asia October 2015
Creating a Territory Plan or having Preferred Marketing Areas is a desire of most franchise systems, however evolving into a good system can be a nightmare.
Most Territory Planning exercises we handle begin from the “Beer and Pizza” approach, and in many cases have evolved at people’s discretion. The “Beer and Pizza” approach is normally when a group of management (and some franchisees), converge around a map on a Boardroom table with beer, red wine, a couple of pizzas and a black crayon, and some good ideas! Inevitably it is built around where existing stores are, or where dominant Franchisees want to have as their exclusive territory. The downside is uneven opportunity in territories, overlaps and spaces in between, which we call no man’s land.
Published in Franchise Asia 2015
I am surprised by how many businesses decide to opt for a franchising model with no plan for how to properly achieve it. I see businesses that have tried to do it themselves, engaged a lawyer as a consultant, or just tried a shotgun approach and fired off volleys whenever they see a problem fail miserably.
Let’s start with a franchise consultant who can take an overview of the development of the franchise.
Franchise consultants are specialists who act like conductors of an orchestra, Their job is bring in (and out) the various instruments as and when required. In our case I say our business is the first violin – needed for strategic network planning, site selection policies and territory planning – and then we pass our work back to the conductor and the client to move to the next steps.
Published in Business Franchise Australia and New Zealand
Many businesses we deal with are structured at marketing to other businesses (Business to Business - B2B), and therefore the logic of how to establish a territory that is normally used when you sell to consumers (Business to Consumer - B2C) goes out the window.
Many B2B businesses sell a product, the likes of printing companies such as SNAP and KwikKopy, and many sell a service. The service may be couriers such as Fastway, changing office light bulbs, or providing business loans or business insurance. Both products-based and serviced-based franchises normally need to give a territory, especially if there is central ordering, and jobs are allocated to franchisees. You want to be sure you receive all the jobs you are entitled to!
The core thinking in this type of business is we want to know where the customers – other businesses are, rather than where people live.
Should a franchise that operates out of a “bricks and mortar” store give territories or not? That is one of the biggest questions in Franchising today.
There are many opinions, and companies do it differently depending on their size, brand awareness, level of investment required by the Franchisee and basically, the view of the CEO or his franchise advisors.
The Franchisor’s views are normally around the line of let’s keep it to a minimum as it gives us more flexibility for the future. The Franchisees view is normally around thinking of it as an exclusion zone and therefore a guarantee that the Franchisor (or his successor) cannot introduce another store into the area.
Published in the Business Franchisor 2011
Anyone who watched John Cleese in Faulty Towers will remember his great lines about ‘Don’t bring up the war!’ The same can be said for territories, preferred marketing areas, exclusion zones, or whatever name you chose to give them. If you are a franchisor, may I suggest you think very carefully about what you agree to right from the start. As, like many things, promises once given are VERY hard to get back!
What's in a name?
The first point I suggest you think about is, “What am I giving a franchisee in terms of a spatial footprint and what should it be called?”
The four most common things that a franchisor gives to a franchisee are:
Article published in Franchising Magazine Jul/Aug 2014 VOL.27/NO.4
Article was published in Business Franchise AU & NZ Magazine Jan/Feb 2014
Where should I go?
How do I know my territory is sufficient to support me? Do I get what I am paying for?
Service franchises have a great range of entry costs, from free entry and a high level of royalties, to a high entry cost, with lower royalties, or a medium entry cost and a flat weekly or monthly payment. No matter which model you are working with, over a period of time you can estimate the payments to your Franchisor, and is this value for what you receive?
In the Service businesses, we often see large areas set out with very strict boundaries. The Financial institutions such as ANZ, Mortgage Choice, Aussie and CBA all have models like this, as they then allocate leads, and it needs to go to the right franchisee (who has paid for that area).
Published in the Franchising Magazine Mar/Apr 2013 Issue
Getting the territory right for service franchises is essential. So where should you go, and how do you know your territory is sufficient to support a business?
If you're investigating whether or not to invest in a business in the growing services sector it is inevitable that you will have questions about franchise territories.
A service franchise can focus on house maintenance, cleaning, ironing, oven cleaning, even providing a care service. Or if you like the outdoors - working in the sun, rain and wind - maybe one of these is for you: pool cleaning, dog walking and washing, building and renovating, antenna installation, roofing, paving, gardening and landscaping.
.... What you need to know (and ask your franchisor)
A couple of large clients we work with have started their working relationship with us by showing us a series of paper based maps, and saying they have all their territories worked out, and just need a few ‘minor’ issues sorted out, and all will be fine! In these cases our first week of work was to copy all the individual territory maps into our GIS – Geographic Information System or mapping system, to see what we are dealing with.
WHAT YOU NEED TO KNOW AND ASK YOUR FRANCHISOR?
A potential client rang me the other day and said he and his wife were looking at going into a mobile franchise relating to the auto industry. He said the franchisor had given him a territory and asked if we could do some work to decide if it made business sense.
Peter Buckingham is the Managing Director of Spectrum Analysis Australia. He is a certified Management Consultant, and a Fellow of the FCA and IMC.