Franchise businesses appeal to people for many reasons. Entrepreneurial types can bypass some of the challenges of getting a business concept past the planning stages and instead go with a proven concept that has been successful already many times overs. With the advantages of brand recognition, support from the franchise organization with everything from employee training to lease negotiation and minimized risk, it’s an option that makes a lot of sense to a lot of business people.
Why Some Franchise During a Challenging Economy
Few industries are completely protected from recessions and down economies, but the franchise business model tends to be one of the more resilient for many of the reasons mentioned above.
Franchised businesses receive support from their franchisor and resources that independent businesses do not. In addition, franchises bring a track record of success that lenders are more likely to trust when economic times are less than optimal. Independent business owners might struggle to secure real estate and funding, but franchises have some important advantages that can make this easier.
Franchisors, Are You Prepared to Maximize Your Potential?
Right now, the U.S. economy feels…uncertain. The inflation rate is the highest it has been in four decades, yet some economists cite positive data like low unemployment and job growth.
Still, lower-risk investments like franchise ownership might appeal to entrepreneurs more than going out on their own. Without a doubt, those potential franchisees will still do their homework to ensure they make a sound investment.
As a franchise organization, it’s important that you prepare for this. Here are a few tips to ensure your franchise organization is doing the right things to sell more franchises during uncertain economies:
Analyze, analyze, analyze.
At SiteSeer, we see businesses that succeeded with one location in one area decide to take their concept national…to any franchisee that is interested. It’s much better to analyze markets carefully and create a franchise expansion plan. You’ll need to understand your potential in the markets where franchisees are interested. Your buyers need a clear understanding of your vision and their own potential for financial success.
Define franchise territories using a solid methodology.
Not only must you establish a methodology for selling franchises, you need to be transparent about what it is. Using data to vet and establish territories allows you to succeed as an organization, and it also protects you as a franchisor.
Identify ideal customers.
In any business, it is important that you put significant effort into identifying your target customer. But when defining franchise territories, this is especially critical. Franchise territories should be designed to serve your best and most profitable customers.
Create sales forecasts.
The strength of your concept and brand are both important factors in your ability to sell new franchises, but prospective franchisees especially want to understand their financial risk. Creating sales forecasts isn’t a perfect science with guaranteed accuracy. However, simulating franchise locations’ performance using good data and assumptions can help you prove the legitimacy of your franchise.
SiteSeer can help!
Our team helps franchisors plan territories and grow smarter! Our Automated Territory Optimization Modeling (or “ATOM”) tool allows companies that have franchise or sales territories to plan future territories based on rules they provide. For example, a company that is seeking to plan future territories with 100,000 or more people with a median income of $75,000+, and with no more than 10 competitors within a five-mile radius.
ATOM will try millions of combinations of ZIP Codes or other geographies until it maximizes the number of territories that meet those requirements. Once the territory plan is complete, we load it into SiteSeer and the user can use SiteSeer’s Territory Manager to maintain and/or change territories.
Contact us to learn more about our software’s features and tools for franchise businesses and how we can empower you to make better site selection decisions, define profitable territories, and manage your franchise program with confidence.
