Multi-Unit Real Estate & Site Selection Advice - Site Selection Data & Criteria
Earlier this year, contributing writer Sara Wykes interviewed several multi-unit franchise operators about how they handle site selection and real estate challenges in today's market. She spoke with a number of operators who talked about finding that perfect franchise location, one that augments the odds of success and reduces the risk of failure.
Here are some insights culled from her interviews:
Data and Criteria
This spring, Allen Pinero opened the first of a planned group of six Blink Fitness franchise locations in New York state and New Jersey. In an area where real estate values are among the highest in the nation and competition for good locations is tough, Pinero is depending upon a sophisticated and comprehensive set of data and criteria. His criteria include basics he knows are crucial. "I first look at the science behind site selection: What are the demographics in the 1-mile and 3-mile ring and does it hit the 100k population mark? Are the income levels in the $35,000 to $75,000 mark? Does the site have the best visibility out of other shopping center locations? Does the shopping center have good co-tenancy? Is there a grocery store next-door or close by? Does the shopping center have ample parking? Members do not want to get frustrated by parking far from the entrance or to not find parking at all." All of these are tangible data points that every fitness club looks at, Pinero says. "There is nothing new to the science but you do need to meet the criteria to have a good starting point."
He also believes in the value of the less obvious. "There," he says, "is the art behind site selection: Who are the competitors? What are their members saying about their gyms? Is it too dirty? Is it too disorganized and messy? Are people spending 10 minutes trying to find a pair of dumbbells? Are they going there out of convenience? Are staff members unfriendly and rude? Are the rules too strict? Do members feel unwelcomed? Social media reviews, tour visits, and in-club member interaction can give me that information. These all lead to the basics of member experience."
Finally, Pinero adds in an analytical model to review demographics and customer acquisition and competition metrics to produce a membership range. "If I feel comfortable with that membership range, I will estimate a revenue number based on that range and look at a general profit and loss that will include general terms of the deal to produce a cash flow number. If that cash flow is within my targeted range, then we move forward with negotiating that deal."
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