How Franchisors Determine Territories

Posted by Tom Scarda, Certified Franchise Executive on Nov 27, 2019 2:54:52 PM

In how to buy a franchise, franchise opportunities, commercial real estate

One of the most difficult management challenges facing franchisors is defining franchise territories in a way that minimizes cannibalization, but doesn’t leave the market underserved. Franchisors who do this well set their franchisees up for success. 

Strategic franchisors make objective, data-driven decisions when it comes to franchise territory determination, rather than basing it on guesswork.

Franchise territories should be granted only after a data-driven analysis has been conducted to make sure that the franchisees don’t eat into each other’s profits – because it’s simply too risky to assume that franchisees will pull business solely from within their designated trade areas.

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