As a franchisee, you may be operating in a specific area laid on by your franchisor.
This is known as your territory and there are a number of factors you need to be aware of with these. Franchisees of the same brand will often not work in the same territory as doing so will be detrimental to both the franchisor and franchisee.
Do you already have a location in mind for your new franchise?
To help you decided where to purchase your franchise, in this article, we will explain more about territories and what you should be aware of when operating within a territory.
What do we mean by territory?
Territories can be defined by a number of different factors. Sometimes, geographical areas are used to define the territory lines but demographics and population size are also considered.
A common mistake that many franchisors make is creating territories that are too large. Sometimes, they will then reassess and find that more franchisees are required to manage the area effectively. And of course, even if there is a large geographic area, if there are not enough customers, the territory will not be successful.
Make sure you do your research, are there many competitors already operating in your chosen territory and if so, how successful are their businesses? If you’re thinking about buying a franchise resale, then you will have a wealth of information available to you, all you need to do is ask the existing franchisee to size up the opportunity.
Exclusive and non-exclusive territories
Many franchisors will give exclusive territories, where the franchisee can market their branch without the direct competition of another franchisee, though this is not always the case and you will always need to ensure you have enough customers to be sustainable.
Non-exclusive territories do not always mean that the franchise will not succeed. It may just mean that the business is not facing as much local competition. The latest BFA survey results show that 97% of franchisees turn a profit, which is an indicator that the industry is thriving irrespective of the territory type.
How to maximise your territory
As we mentioned earlier, bigger isn’t always better. You may have a large geographical area but it is customers that are most important. Before you decide to become a franchisee, ask the franchisor about the size of the territory and how they determined the territory lines.
Regardless of how large or small the territory is, if you deliver good customer service and quality products that they will recommend, you can make your territory work for you and build a successful franchise.
Having your own territory with a franchise is an exciting opportunity. It can be a challenge meeting customer demands and solving their problems, but tapping into this pool can bring great rewards. If you find that you need additional help with managing your territory, your franchisor will be on hand should you require them.
Why not have a look at the territories that these franchises operate in and see if there is one for you.