Selecting a Territory for Your Franchise

03/06/2015
If you’re considering investing in a franchise opportunity, one of the factors you will want to consider is territory. While many franchisors of a fixed location business – such as a retail store or restaurant – do not grant franchisees a territory beyond the four walls of the location of their business, the franchisor of a mobile business generally will rely on providing a defined territory to reduce intra-brand competition.

The size, configuration, location and composition of your territory, along with the territorial terms imposed by the franchisor, can be either an asset or a handicap in building your business; it’s best to find out which before you sign the franchise agreement.
When creating or evaluating a potential territory, the following are a few factors to consider:
Size: Bigger territories do not always provide greater sales potential or profitability. It’s often a smaller territory that ultimately is more lucrative, because it is easier to build the brand through your marketing efforts and therefore to create a loyal clientele. A smaller territory can also be more efficient to manage logistically, as you won’t have trucks spending time on the road rather than time on the job. And, you won’t have undeveloped or underserved parts of your territory. The right size territory includes a number of prospects sufficient enough to enable you to achieve your sales goals, but is not so vast as to be unproductive or lower your gross margin.
As part of your evaluation, you may want to get in your car during prime drive time and travel from where you would put your office to the outer ends of your proposed territory.
Configuration: The shape of the territory also contributes to ease of management, marketing effectiveness, and profitability of the business. A contiguous piece of land that makes it easy to get from your office to the outer boundaries in an efficient manner is best. Also, look at how the proposed territory fits with your marketing plan. For example, if direct mail is the mainstay of your advertising efforts, you want to be able to easily mail to prospects in your territory without having to purchase multiple lists or zip codes.
Location: A territory adjacent to or near other developed territories can give your business a head start, as your potential customers may already be aware of your brand. If you are the first franchisee in a region, you will want to budget more for your initial advertising efforts to establish brand awareness.
Composition: It’s important to know the profile of your potential customers before you design or accept a territory. When evaluating a potential territory, the only number that matters is the number of those consumers who likely have the desire and ability to purchase your product or service – others are “waste circulation.” For example, if you’re selling a service to small businesses with under 50 employees, the number of large corporate headquarters or residences really doesn’t matter.
Degree of Territorial Protection: Item 12 of the Franchise Disclosure Document (FDD) describes Territory. Make sure that you pay close attention to whether you will receive a territory and, if so, whether it is “exclusive” or “protected” – and how those terms are defined in that franchise system. Also worthy of consideration:
Open Territory – What are the franchisor’s policies regarding open territory? Can you market and serve customers in an open territory, and what happens when that territory is sold to another franchisee? Will the franchisor notify you if the territory is about to be sold? Will you be required to turn over your customers in the open territory to the new franchisee?
Referral Business – Are you able to accept referral business from outside your territory even if it is in the territory of another franchisee and, should that happen, are you required to compensate the franchisee in whose territory the work is done?
Carve-Outs – Has the franchisor reserved the right to directly service certain venues or businesses such as airports, shopping malls, universities, hospitals, sports arenas, etc.?
House Accounts - Does the franchisor have the ability to designate some businesses as a “house account” or a “national account”? If so, are franchisees able to participate in serving those accounts, and under what conditions would you be offered or denied participation?
Performance Requirements: Some franchisors require that their franchisees meet certain sales or revenue targets in order to maintain their territory. If this is the case with the franchise you are considering, make sure that your proposed territory provides the potential necessary for you to meet those targets at minimum market penetration levels.
Neighboring Franchisees: Part of your due diligence (for the franchise as much as the territory) is to meet your neighboring franchisees. You will want to determine what reputation they have in the general marketplace, and whether their reputation will help or hurt your efforts to build a business in the territory you are considering. Take the time to meet your neighboring franchisees personally and get a feel about them as franchisees and as people. Do they still have a passion for the brand? Are they someone with whom you can work to take advantage of joint marketing opportunities?
Established vs. New Franchise System: Established systems offer the advantage of brand awareness; consumers have often heard of the product or service before it is available in their local community, and they will eagerly await your opening. On the other hand, one advantage of investing in a new franchise concept is that there is plenty of open space from which to design your territory, and new franchisors are generally willing to work with their franchisees.
In Summary
Remember, as you go through the process, that few territories are perfect and you can expect to make some trade-offs. However, if you do your homework and know where there may be weaknesses, you will be able to plan accordingly to overcome almost any obstacle.

Fonte:http://franchises.about.com/od/choosingafranchise/fl/Selecting-a-Territory-for-Your-Franchise.htm?utm_source=exp_nl&utm_medium=email&utm_term=list_franchises&utm_campaign=list_franchises&utm_content=20150607

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