Keeping territories to a sensible geographical size will help franchisees maintain expected profit margins and help customers get to the right place.
If territories cover too much area, the perceived opportunity may be reduced as customers refuse to travel the distance, or franchisees feel constrained by the operational costs of servicing them.
Remember, a great franchise territory contains enough opportunity in an area the franchise owner can easily cover.
It certainly seems a logical approach, but it is categorically one of the worst ways you can define your territories.
Firstly, it's more difficult to define the actual size of the opportunity; it could be too small but is likely to be too large.
Secondly, customers are never uniformly spread; therefore, you will never pull customers equally from all directions.
It will save you time and money initially but cost you far more in the future.
A lack of profitable opportunity will lead to failed franchises, damaging the brand. Too much opportunity will lock it away and limit network potential. And ambiguous boundaries will cause disputes between franchisees as they fight for business.
Use referenceable geography in which the business opportunity is easily quantified.
Most businesses should use postal boundaries; They're easily understood, most demographic data is available for them, and they leave no room for disputes between franchisees.
If, however, your work is generated exclusively by the public sector, you may want to use administrative boundaries.
Most administrative boundaries are openly available through government data portals, however, postal boundaries often come with licensing terms. You'll need complicated GIS software to view them.
Thankfully, we developed an easier way to create your territories. We call it Vision®.Learn about Vision®
The right data lets you identify the business opportunity in an area and build a successful territory network.Read more
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Roads, rivers, mountains and valleys. Learn how to make the market more accessible to your franchise owners.Read more