There is an old saying, "location is
everything." in the case of the franchise business, nothing is couldn't be
more accurate than this.
·
Population, demographics & competition, plays
a vital role in the success of a franchise.
·
If you aren't visible or convenient, there's a
good chance your franchise business will suffer.
Opening
a franchise may appear to be a basic way to run your own business. Franchising allows business people to run an organization without starting from scratch. But
just because a business already has a widely recognized brand and established operating
procedures doesn't mean it’s easy to run one.
Maybe
you already have an area in mind where you'd like to open a franchise of
specific brand, but what guarantees that the franchise can run successfully
there?
The right business model with the right location for your franchise will be the
difference between success and failure of a franchise Because Businesses need
to establish locations that generate the most customer traffic.
There is no guarantee that every
franchise model is going to succeed in every area or market where you open a
franchise. There are several factors which affect the franchise business in
specific locations, they are as follows
External factors
Demographics
There
are many things to consider when choosing a location for a business. One of the
first factors in choosing a business that appeals to the local demographics. If
the people in an area have no need for a specific kind of business, then there
will be no traffic for your business.
Knowing
the social structure and statistics relating to the population and the various
ethnical groups within a population can help you to identify the right customer
base for business, or provide you with a clear picture of a customer base that won't
be of any value to your business.
Local laws and standard business
practices of an area
Towns
and cities have their own laws regarding how businesses can operate. Sometimes
there are contractual obligations that could require the franchisee to pay a
range of fees, such as property maintenance, local taxes, permits, and
insurance.
There
might be excessive taxes that can affect the bottom line of your franchise.
Some municipalities may even restrict certain types of businesses. It's
important to understand the legalities, permits, and expected business
practices of any municipality before you decide to open a franchise in the
area.
Characteristic of business and target
customers
Different
franchises will thrive better in certain locations. Depending upon the type of the franchise you have, having major roads and highways near your franchise can be
a big determining factor in the success of your franchise, particularly those
franchise businesses that rely on a steady inflow of customers.
Another
factor playing a major role in franchise success is visibility. Restaurants and
other franchises that rely on traffic will do well near business districts
where rent might be more expensive. High visibility is essential to the success
of these types of franchises. If you aren't visible or convenient, there's a
good chance your franchise business will suffer.
Franchises
that don't rely on walk-in business can get away with paying less rent in less
populated areas. Examples of these include cleaning franchises or any other
service franchise that travels to the customer.
Administrative factors
The franchisee doesn’t have the right
stuff to appropriately work the franchise.
In
a number of situations where an individual purchased a franchise that required
certain skills, the franchisee didn’t have, despite due diligence on the part
of both parties.
For
example, as per the business model, if a franchise requires strong selling
skills and the franchisee is not a salesperson, then it can be difficult for a
franchisee to successfully operate the franchise due to the absence of required
business skills. Although the solution might be for the franchisee to hire a salesperson,
it’s easy to say than done.
Wrong fit for business
There
is a major contrast between loving the products or services, and loving the challenge of maintaining a business that sells those products or services.
Because sometimes franchisees, no matter how passionate they are about the
product, the brand or the industry, just are not suited to the business.
Most
of the time's franchisees failed to evolve with the business over time,
incapable of managing or retaining staff, or a whole bunch of other reasons,
simply being they are the wrong fit for the business.
Summary
At times, just having a brand name and a defined working
method are not enough to make the franchise successful. Most of the time,
geographical location, competition, people's preferences, and the ability to
spend in a specific area, play a crucial role in determining how the franchise
will operate. So if you are thinking about taking a franchise of a renowned
brand, then it is important to take all that into consideration before making
any decision.
Address: Unit No.450, Mastermind One - IT Park, Royal Palms, Aarey Colony, Goregaon(E), Mumbai, Maharashtra 400065
About Prakash Bhosale:-
Prof. Prakash Bhosale is the entrepreneurship consultant for startups. He is a serial IT, Media entrepreneur & leading business consultant He has Over 15 years of experience in education, corporate, IT, e-Marketing, Consulting domain. He is a columnist on business & entrepreneurship with newspaper, magazines, portals, published over 1100 articles. He is the writer of the 4 books on business, entrepreneurship, business ideas. He also guides PhD fellows, business plans, DPR preparation.
Phone: 08355979232, 09867806399
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