Demographics and Franchise Placement

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Posted on January 8, 2009 by Peter Siegel, MBA

Demographics and Franchise Placement

Demographics and Franchise Placement -
Location Intelligence A Key Tool

Although we are still somewhat in the early years of location intelligence tools, new technologies are becoming more available and easier to use for those investors looking to buy a franchise (when it comes to analyzing just where to locate it). What is location intelligence? In the world of franchising, “location intelligence” describes technologically based tools that are used to help investigate possible locations for new businesses. Indeed, when you are shopping for a franchise business to purchase, the success of the concept most certainly relies in part on its location (at least to some degree).

Besides physical traffic patterns and retail / office availability, location intelligence tools now analyze a number of additional population characteristics including:

Density - One of the most significant areas in which location intelligence software comes into play is the examination of potential customer density. While it might initially appear to be advantageous to be offered a large territory with a large population size, with fuel costs ever rising, it becomes ever more imperative to realize just how far potential customers might travel in order to visit your business.

Income - Analyzing household income levels and comparing them to a potential franchise customer base is fairly straightforward. Just as there are franchises that succeed in high income level areas, there exist franchise opportunities that are better successes in lower income environments.

Culture - Culture can play a key role in establishing a franchise business (especially when the franchise concept might be new altogether to a particular area/region). Location intelligence mapping can often analyze past statistics while sometimes even estimating future cultural specific trends for any region/locale.

Overall Size/Area - Naturally, the total size of the area your franchise location might serve is a significant statistic when analyzing possible locations for your business. More obvious is the question of whether customers will visit you, or will your franchise service be taking to the road when serving customers. Mobile service-based franchises have most notably been affected by the recent increases in oil and gas prices. However, by using new technologies including web-based mapping tools, and GPS navigation gear, these businesses can directly benefit from recent advances in location intelligence tools.