How can franchisors identify the best markets for expansion?

Before you look for new markets, you need to evaluate your current performance and identify your strengths and weaknesses. Analyze your sales, profitability, customer satisfaction, and brand awareness in different regions and segments. Find out what makes your franchise successful and what areas need improvement. This will help you determine your competitive advantage and your growth potential. Then follow Joe's good advice for identifying the best markets for your brand - the answer is not the same for every brand.

5 Tips for franchisors to identify the best markets for expansion. √ Get proof of concept with multiple locations concentrated in a DMA or contiguous DMAs to establish a core market to grow from. √ Find out who your customers are and their characteristics. √ Determine the best footprint and location data to determine your site selection standards and criteria. √ Test and refine your marketing in your core market to learn what works to generate sales and how much the advertising spend is for those channels √ Hire people and/or expert advisors who have the experience in this that you don't have to fill in the gaps.

Cultivate relationships with commercial real estate brokers for valuable regional insights. Also, listening to franchise prospects in target areas provides crucial insights into growth potential.

3 pistes pour identifier des zones à potentiel: 🌈 Localisez avec une heatmap les zones où vos facteurs clés de succès sont les plus présents: niveau de revenus, densité d’une tranche d’âge, densité de maisons… 📍 Repérez vos meilleurs concurrents: s’ils sont là, c’est probablement qu’il y a un marché local intéressant. 💏 Identifiez vos bons voisins: les entreprises non concurrentes avec une cible similaire. Leur présence peut indiquer une concentration de votre clientèle cible.

1. **Market Research:** Conduct thorough research on demographics, consumer behavior, and competition in potential markets. 2. **Franchise-Friendly Environment:** Assess the business-friendliness and regulatory environment for franchises in each target market. 3. **Local Demand:** Analyze consumer demand for the franchise offering and consider how well it fits with local preferences and needs. 4. **Economic Indicators:** 5. **Competitor Analysis:** Understand the competitive landscape and identify areas with less competition or a gap for the franchise. 6. **Infrastructure and Logistics:** Consider the infrastructure, supply chain, and logistics 7. **Legal and Regulatory Compliance:** 8. **Franchisee Interest:**

Proactive planning is key. Concentrate units in a specific market for efficiency, evaluate real estate agreements, and assess location quality. Analyze brand reputation and engage with local experts for market insights. When acquiring, investigate selling reasons, reputation, and sales trends. Scrutinize factors in your control for underperforming stores. Explore market exclusivity for future expansion.

In territories in which the franchisor has the capacity to support its franchisees, including supply chain requirements, have multi-unit franchisee candidates prepare a market and growth plan. This serves several purposes (1) in most cases Franchisors do not have the resources to conduct proper market studies in multiple markets, (2) it will provide you with a better understanding of the capabilities of the franchisees and their market knowledge (3) it will provide you with base line information you require and (4) based on the information provided, you can then do a focused market evaluation. Micro-targeting is expensive and unless it is done with the proper professional rigor, it can eat up funds without really providing any benefit.

A great way emerging franchisors can research and plan for markets to expand to is to research where the top franchise players are expanding - which zip codes, types of commercial properties, location and surrounding businesses in a shopping center. Look at what McDonalds, Chick-Fil-A, and Starbucks are doing because they’re spending the big bucks to conduct market surveys.

Emerging and mature brands face distinct considerations. New businesses, constrained by resources, should focus on understanding their customer base—analyzing spending habits, demographics, and identifying core consumer personas. This insight helps pinpoint markets aligning with local needs. Mature brands, with ample resources, can collaborate with analytics companies, leveraging successful locations to develop algorithms for scoring potential growth opportunities. Confidence in services is vital; identifying and being near competition, especially struggling ones, can attract their fleeing customers. Evaluate the cost of doing business in different regions, considering real estate, labor, and operational expenses.