When you are about to buy a franchise you must look at the competition both from others companies, and from the franchise brand, and ask what is a reasonable distance between stores?
Competitors are normally not a great problem, and in fact, as in the case of homemaker centres and certain types of shopping centres or shopping strips, neighbouring competition can actually be an advantage.
This is what we call “clustering”. Name a reasonably sized homemaker centre/precinct, and count the bed stores, furniture outlets and electrical retailers. Experience has shown that these retail outlets actually work best together, as the combined drawing power of the homemaker centre far outweighs the advantage of being out on their own.
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.
I am a very keen Hawthorn fan, and now have the personal record of attending 7 Grand Finals in which they have played – and seen 7 Premiership wins.
So what does Hawthorn do differently from the other 17 teams in the AFL? They work to Their Rules – and do it the best way possible. Whilst I cannot say I am an expert, these are my views – and I think they have a real business connotation:
Hawthorn has been amazing at identifying young talent, and then developing it over a few years. Some of this talent comes in quickly, but they are not scared to wait and let the bigger boys develop, even if they play in the Box Hill Hawks for a couple of seasons.
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.
If you are buying a retail franchise you need to understand what makes a great location.
While we can list 10 or 20 drivers or factors that lead to the success of a retail business, they have different levels of importance depending on what you are selling, and how.
For example if you are selling petrol and convenience goods, your first driver is probably the numbers of cars passing the site. If you are a restaurant owner, and have a drive through as a major part of your business, this still may be your number one driver. If you have a local restaurant – sit down and wine and dine – then the area, demographics, competition and other factors will probably be more important than traffic driving past.
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:
I have recently felt the need to send this article (a bit tongue in cheek) to a couple of friendly clients of ours who seem to move from one drama to another without any longer term thought, especially on their site selection policies. I hope you enjoy it, and if you feel it fits your situation – then it probably does! Feel free to pass on as you see fit.
When you are up to your arse in Alligators it is hard to remember that the plan was to drain the swamp...
Fast food and Quick Serve Restaurants across Asia have traditionally been “inline” stores in a shopping strip. Across the western world, the trend over the last 30 years has been to Drive Thru’ s, almost at the exclusion of any free standing restaurant that cannot offer a Drive Thru being sold, or knocked down.
In many countries such as Australia and the USA, we would be expecting around 60 - 70% of all major fast food restaurants like McDonalds and KFC to be what they call FSDT – Free Standing Drive Thru, and probably selling well over 60% of their revenue thru the Drive Thru windows
The science of drive thru’ s has greatly improved over the years where the process now starts well away from the store where you read the menu boards and place your order into the microphone. In many large stores you then drive forward into a window where you pay your money, and then drive on again to the window where you collect your food before heading out. This maximises the efficiency and moves the maximum number of customers thru the service lanes.
Peter Buckingham is the Managing Director of Spectrum Analysis Australia. He is a certified Management Consultant, and a Fellow of the FCA and IMC.