Franchise Territories - Solving the Goldilocks Problem

| 0 Comments | 0 TrackBacks

Most franchise territories are created by some "defined" geography.

Most franchise territories are created by some "defined" geography such as a group of Zip codes, a ring dimension or a described area.

Since all political geographic boundaries are readily available including block groups, Zip codes, census tracts, counties, states, designated market areas, and Metropolitan Statistical Area-Core Based Statistical Area, these are mapped and viewed within a global information system (GIS) and are a great foundation for the beginning step in defining territories.

GIS tools allow the franchisor to draw or create the territory in digital format.

For some franchisors, this may be enough, having a digital database of existing territories. There may not be a need to understand the demographics of the area, just be able to see it on a map. This allows them to print a hard copy of the maps to include in the franchisee agreement, be able to identify potential overlap issues with new territories, and to map out potential future territories.

Counting the Customers

Some franchisees choose to enhance their mapping capabilities by including geo-demographics, both consumer and business related. Adding demographic data to the geography (block groups, counties, DMAs) dramatically enhances the ability to identify or "target" groups of desired customers. The franchisor may know that their targeted customer base is a household with a certain level of average income.

Using the mapping-demographics, every block group in the United States can be found and mapped that meets this criteria. The process of creating the franchisee boundary will now include a count of potential customers. Having these counts leads to the development of defendable, equitable territories.

For those who may not know their true customer profile, mapping tools can include geocoding (assign a latitude-longitude coordinate based upon an address) that places the customer on the map.

Once the customers are on the map, attaching their location with the corresponding demographics of their block group to create a customer demographic profile is easily accomplished. By mapping your best customers and developing a "target" profile, you can go find these targets anywhere in the United States and develop intelligent franchisee territory searches.

Some franchisors are business-to-business rather than consumer oriented.

The same process applies, but by using a different set of geo-demographic data. Business population counts are available by North American Industry Classification System/StandardIndustrial Classification codes by their address or summarized at any geographic level (block group, Zip, county). Either way, this data can be viewed as information on a map.

If a franchisor targets a specific business population, this targeted group can be mapped and territories developed based upon desired levels of business counts and potential.

Understanding and documenting the potential customer base of a franchisee territory will also benefit the franchisor by allowing them to effectively maximize the potential number of territories in a given market area.

The Goldilocks Problem

Franchisors wouldn't want to "give away" too much territory or on the other hand not provide an adequate customer base.

By understanding the demographic customer potential and using a defined minimum criterion for these customer levels, one can map the optimal number of territories per market assuring that each is sufficient with the potential customer base.

When you need help in creating territories for your franchise, please contact us at:

IntelleVue LLC 11102 East 75th Place Tulsa, OK 74133 Longitude: -95.853451 Latitude: 36.054777

Contact: Jeff Davis 918.250.5561 [email protected]

Our Franchise Commmunity on LinkedIn

Join & Contribute to our Franchise Commmunity on LinkedIn.

Be Recognized as an Expert.

Leave a comment

No TrackBacks

TrackBack URL:



Search for Articles

Follow Us

About this Entry

This page contains a single entry by Jeffrey Davis published on February 6, 2015 1:53 PM.

Who Makes the Best Franchise Operators? was the previous entry in this blog.

How to Beat the NLRB is the next entry in this blog.

Find recent content on the main index or look in the archives to find all content.