How to find the right location for your business?

Friday 5 June 2015
franchising your business
Art vs Science, a Franchisor’s site selection toolkit.


Determining precisely where you will open your retail store is crucial for any business. This is even more prevalent in franchising where the onus is often on the Franchisor to select an appropriate site, but ultimately it’s the franchisee who bears the risk and will suffer the losses if the location fails. While good location is not usually the first reason credited for a business being successful (we always spruik our great service and products first), it is almost ALWAYS mentioned as the catalyst behind a business not performing as expected. In a franchising context, the decision making process behind site selection typically attracts the most scrutiny when a franchisee fails. The spotlight intensifies when a franchisee goes down the path of seeking damages.

At the forefront of a Franchisor’s site selection toolkit is having a consistent approach for assessing the suitability and feasibility of a site. There are several key considerations that you can apply when digging deeper into the pins you have strategically placed on the map of Australia for your possible site locations.

1) Understand your target demographic and develop an understanding as to how your business offering fits in with their needs and the site you have identified. One of the reasons shopping centres have been successful is courtesy of providing an environment where consumers can fulfil all their needs in one central location. Our time is valuable, so if we can buy a new shirt, get a haircut and organise the week’s groceries all in one hit, we are likely to do so. Knowing the habits of your target demographic is crucial in providing an outlet which fits in with their routines: Is the gym available on the way home from work? How far away is the nearest Indian restaurant? Convenience becomes a higher priority in an age where growing, and increasingly time poor populations can make getting around as difficult as sharing a phone booth with ten people.

2) Take advantage of available data. Much of the science behind site selection feeds back into the commercial assessment of the site. Numbers speak volumes, and we are lucky to be in an era where data plays a huge part in our lives and is easily accessible. Take a look at that Fitbit on your left arm assessing your daily step count? Think about the type of information that you can analyse for your site with a simple Google search, such as:

  1. Census data for average spend per household in the surrounding suburbs;
  2. Mining through your customer database for quantifiable insights into where your target market is located and any possible trends;
  3. Investigating average shopping centre turnover per square metre.

3) Ex-Brumby’s Bakery CEO Michael Sherlock refers to a term known as an “Ant Trail” when he discusses evaluating potential sites. It references the concept that ants all make a trail to the nearest food source. Think about the route you take when you walk into a shopping centre? It is very likely that it is quite similar. This concept highlights the importance of visiting your identified site and carefully watching foot traffic to see where the majority of people leave their “trail”. If you are negotiating with a shopping centre for a particular site, it helps to know if your target market will see your site in their natural routine. In Brumby’s case, a key consideration is being between a supermarket and the car park, to ensure consumers can place their bread on top of other groceries on their way out the door.

4) Take particular notice of the neighbouring tenants and competitors. Firstly, it will provide an insight into what type of consumers and foot traffic are nearby, but also it presents an opportunity to take advantage of their research and marketing efforts. Many bigger businesses have site selection nailed down to a tee and have significant marketing budgets to boot. If their consumers align with your target market, and you offer an unfulfilled need, there is a huge opportunity to capitalise on, or even assist with, a nearby tenant’s marketing activities. In the case of your competitors, there can be alot learnt by analysing what type of sites they tend to select and the congestion surrounding them. It is sometimes smart to be close to competitors, but you don’t want to find yourself in a fight to the bottom with too many in close proximity. 

There is no doubt that site selection has evolved from traditionally being an art form into a scientific approach. Particularly in relation to franchising, it is not just your profits that you might be hurting, but also someone else’s livelihood. As such, the key takeaway is to make sure you thoroughly do your research and clearly understand the site parameters which give your business the best chance of being successful.