What To Know about Franchise Territory Mapping

Franchise territory mapping is the process of determining where to set up a location and defining the operating area around it. It is a detailed process that involves many factors, from researching customer demographics to identifying potential nearby competitors. Franchisors take a strategic approach to establishing and defining a territory to maximize a franchise's profitability. Territory mapping is a critical decision that can ultimately determine whether a business succeeds or fails.

What is franchise territory mapping?

Franchise territory mapping is the process of dividing regions into territories for franchisees. These territories can be granted as exclusive or non-exclusive by the franchisor. Here are the three basic types of franchise territories:

Exclusive – Having an exclusive territory means the franchisor will not establish another unit in that area that would compete with the franchisee's business.

Non-exclusive – These territories do not offer those protections. The franchisor can establish their locations or allow other franchisees to set up units in that region.

Hybrid – Some franchisors use a hybrid approach based on certain factors. Franchisees can be granted exclusive rights for several years or have an exclusive territory for one product but not another.

In some cases, franchisees can have overlapping territories in which several franchises operate in the same territory. Franchisees often target different markets in these situations.

The process of territory mapping is important to franchises for several reasons. It prevents potential market cannibalization when one franchise business takes customers from another. It also evenly distributes locations based on the customer base and avoids gaps between locations. This equitable division gives franchisees clear expectations and preserves positive working relationships with each other.

Using technology and data in territory mapping

As technology and data become increasingly sophisticated, they serve as important tools for the franchisor in how they map a territory. Population data for a given area can help determine consumer demands, which can serve as valuable information for marketing and attracting customers. Mapping software can include visualization to view potential locations on a digital map or integrate third-party population data to help provide vital information for the franchisor.

A detailed analysis of any competing businesses in the area is also an important part of this data. The use of technology and data is an essential part of viewing the entire landscape of where to mark a franchise territory and plays a major role in setting a franchisee up for success.

How territory mapping impacts business growth

Mapping allows franchisors to determine locations that reach customers and also attract more franchisees. Franchise candidates can also use the data to learn more about their potential customer base and profits by comparing territories to other successful units.

The most attractive franchises include exclusive territories, giving franchisees protection and reassurance. It can also help support marketing to potential customers and ensure a larger projection for sales. A visualization map helps people view the specific territories and their boundaries.

Virtually every franchisor uses territory mapping to define specific regions for its franchisees. It can help identify profitable locations, reveal information to increase business growth, and bolster relationships among franchisees. Territory mapping is a detailed process with many factors to consider, but it is an essential part of determining the success of a business.

For more about franchise territory mapping, read this full article by FranConnect HERE.