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Updated 21 Jul 2017


3 Strategic considerations for picking your new franchise location

Whether you open your new franchise in the local mall or the busiest intersection in town, these tips will ensure that you’re making the best decision for your investment. 


Diana Albertyn, 09 February 2017  Share  0 comments  Print


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Upon receiving approval of your application from the franchise head office, the next decision you may have to make as a franchisee is where to set up shop. If your franchisor gives you the liberty to choose between a standalone location and a shop in a mall, the decision you make should entail more than just going with your ‘gut’. 

You’ll need to know the cost of opening and running your new store, the staff requirements for daily operations, and the number of customers your shop will attract – and these all depend on your location. 

Related: Finding the right franchise location


TAKE NOTE

“Figure out your realistic budget and stick to it. You also need to know the size of the space you need before you start looking, as this will have a big impact on the price.” – Nicole Bandklayder, serial entrepreneur.


The NPD Group reported a 2% increase in drive-thru visits to 12.4 billion in 2014. What does this mean to you? Well, you’re looking for a location that will bring you the most sales. This is why picking a prime location for your target market – whether in a private standalone location, or within a shopping centre – is crucial to your success.

These three considerations are key in choosing your business’ new home:

1. Understanding the characteristics of a location

Standalone location

“How many people walk or drive by on a daily basis?” is the question serial entrepreneur Nicole Bandklayder says you should ask when considering a private location. “You can get this information from the owner of the space.”

She also recommends asking the neighbouring stores about traffic numbers, just to be safe. “The last thing you want to have to deal with is signing a lease only to find no customers knocking at your door,” she says.

Mall location 

Business owners need to understand that opening a store in a shopping mall doesn’t guarantee sales from day one. This is according to Monalisa Sam, founder of Tungwa Retail Holdings, a retail and investment firm.

“It is important to request shopper profile information from the mall you have interest in. This will guide you as to whether your target market is visiting the mall in the first place. Secondly having an understanding of the [store] mix in that specific mall will give you insights on any competition you may have in the centre,” she says.

2. Building the team for the outlet

Retail -store -outlet

Standalone location 

According to foodfranchise.com, staff in a standalone franchise location learn to work more efficiently as they’re given less space to move about in terms of competitors looking to poach skilled workers.

This arguably lessens the number of workers you’ll require at a time, lowering money spent on wages, ensuring profitability is easier to achieve. Just remember that travel issues might creep up for staff that rely on public transport, so you may need to arrange a shuttle service for employees. Malls usually attract taxis and buses, making it easier for staff to get to work.

Mall location 

If you're looking to rent space in a mall, says Bandklayder, take note of any time requirements that may appear in your contract. “These locations may require you to be open during certain hours and dates, which would affect your staffing needs,” she says.

If you’re required to stay open 24-hours, based on the mall’s requirements and your franchisor’s business model, you’ll need teams that easily move in and out to keep cogs turning smoothly. Malls are busy, staff is usually under pressure more often, and if they’re performing well, chances are that other food outlets will be looking to hire them at better wages.  

Related: Top advice from franchisees

3. Keeping customers coming in

Standalone location

The chief benefit, arguably, of a standalone location is that your customers come to your establishment because they know where it is and what it is they want to eat. There’s no immediate competition and distractions from your store either.

Another advantage for your customers is access to parking, as malls can be quite crowded. Drive-throughs are easier to construct as well, which proves helpful in bad weather and to attract consumers that are in a hurry.

Mall location   

When errands have exhausted shoppers, the simple smell of tasty food will prompt impulse orders. Being located in a mall also opens you up to heavy shopping crowds. However, more people means less parking. And given the option, potential customers will choose easier access, like a drive-thru for example.

“If you place yourself near retailers that target the same general demographic as you do, it may boost your business,” says Bandklayder.

The type of location you choose to house your new franchise in depends entirely on the costs involved, your daily operations style – your hours and staff management, as well as your target market.

Being in a big mall may seem like a crowd puller, but the competition in the food court could work to your disadvantage. Maybe having a drive-through in addition to a sit-down restaurant is appealing to you – then a prime standalone location would be out in the open.


KEY TAKEAWAYS 

Put some thought into the following before banking on your perfect location:

1. Rands

Consider how much rental costs are in mall locations compared to a private piece of property. 

2. Recruits

Your staffing needs and access to skilled employees will vary depending on where you’re located. 

3. Regulars

More feet may mean more traffic, but also brings more competition in a mall setup. Meanwhile, being in a standalone venue means quicker access and service for your customers, especially if you have a drive-through facility.

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About the author


Diana Albertyn


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