Finding the Right Franchise Location: Six Elements to Win
May 13, 2025
In a previous blog post, I explained that one of the reasons franchisees fail is selecting the wrong location for their franchise. So, to prevent this from happening to you, I will now detail six elements you need to evaluate carefully to make the best decision and find the right franchise location where you can thrive.
Choosing where to establish your business involves both strategy and tactics, so consider each of these factors before signing any long-term lease.
This is critical: all the elements must be right for your business. If you skip one or think it's not that important, you will be sorry in the long run.
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1. The Right Demographics
The first element that you need to look at when selecting the correct franchise location is whether it has the right demographics in the area that surrounds the unit.
I know that when you signed your franchise agreement, the franchisor assigned you a specific area. However, within that area, there might be different demographic pockets, and the closer you are to the best demographic pocket for your business, the better it will be.
- You want to be as close as possible to your ideal client so that the distance is as small as possible, and therefore, the likelihood of them coming and buying from you increases.
How can you know for sure? Nowadays, the amount of technology available that provides demographic details of franchise areas is tremendous. So, if you are searching for a location for your franchise business, I recommend investing in platforms that offer those expert searches and data intelligence that will allow you to make the best possible decision.
This will come even more handy when you have several locations to choose from because then you can select the one with the best possible demographics, among the other elements I will cover in this blog post.
2. Visibility
The second element that you need to consider when selecting the ideal franchise location for your business is visibility, because the more visible you are in the street to the traffic and to the customers that are driving or walking by, the less amount of money you're gonna have to spend on marketing.
Think about it! If people see that you're there, they're more likely to come and visit you. But if they don't even know you are there, you will have to spend a lot of money just to make people aware of your existence.
- Visibility is not just about the building but also about the signage, so investigate if the location allows you to put enough signage to call the attention of the people.
Window frontage and how far you are from the main street are also critical factors in this element.
Do not overlook this. This will be critical in the overall cost that you're going to have to maintain the volume of sales you want.
Keep learning: Location vs. Market, What Matters The Most in Franchising?
3. Accessibility
When selecting your franchise location, this third element goes beyond just how accessible it is for people to go in and out of the unit; it also has to do with how busy the street is. Imagine what would happen if there were no traffic! The chances of customers coming to your store would decrease significantly.
Something else to consider is whether you are on the correct side of the street. For example, if you have a coffee shop, ideally, you want to be located on the side of the street where customers drive to work in the morning, as most people stop for coffee before arriving at the office. This way, they can easily get in and out to grab their coffee.
However, if you are on the wrong side of the street, they would have to make a U-turn to get their coffee and then another U-turn to go back to work, so the likelihood of them skipping their morning coffee is higher because they might be in a hurry.
You must also consider if there’s enough parking for the customers to park their cars, especially if people must come to your brick-and-mortar business to make a purchase.
And if the unit doesn’t have dedicated parking but a shared one, ask the other tenants how busy the parking lot is and at what times. Why does this matter? If you have a full parking lot during your peak hours and your customers cannot park, that could limit the sales you can achieve.
- You might be on the correct street and have the right visibility, but if customers don't have easy access to come and buy your product or service, you will struggle.
4. Dimensions
The fourth element when choosing the location for your franchise is dimensions. You must ensure the unit has sufficient square footage for your model, storage, back-of-house, and customer areas. Additionally, the ceiling height should be adequate, and the restrooms, kitchen, or prep area must align with the requirements of the franchise brand.
Sometimes your preferred location has great demographics, proper accessibility, is on the right side of the street, and has excellent visibility, but not enough space. Don’t limit yourself to a location just because all the other elements are good! It is best to wait a little longer to find the perfect location than to compromise for one that looks good but has the wrong dimensions.
You should also evaluate if the unit has the potential for growth, because in the future you might need more storage room, additional living or dining room area, extra lobby space, more parking for your business trucks, etc.
- Find a franchise location that meets your current needs and will grow with you if necessary.
5. Lease Terms
The correct franchise location also has to do with the lease agreements. The main one is your rent. Is the rent within the range of the franchise model? And if it is, can you sustain it even during slow periods?
- Every business has seasonal sales, and you need to be able to cover your rent and expenses even during slow times.
Tenant improvement requirements are another area you need to consider regarding the lease terms. Are those included within the lease? What are your responsibilities? You must understand every element of the lease and take your time to read it thoroughly, so you don’t encounter any surprises that could put your business in peril.
You can even have support from a real estate lawyer to guide you in this process and ensure that your business can be financially profitable in the long term.
6. Surrounding Business Mix
You should also investigate what type of businesses are surrounding the unit when selecting the right location for your franchise business, especially regarding the number of competitors and the overall image of the neighborhood.
The immediate business environment should align with the type of franchise brand you have or the customers you want to attract. Having the right neighbors, business owners, or services nearby will increase your visibility and exposure and draw in the customers you desire when they come to purchase products or services from neighboring businesses.
If you consider all of these elements, you will be able to choose the right franchise location successfully.
It’s worth the effort! Having the ideal location is one of the factors that will prevent, or at least significantly diminish, the possibility of failure when it comes to owning a franchise business, or really, any business.
Reflections:
- How well do you know your ideal customer and where you can find them?
- Is your signage and window frontage easily seen from the main road or foot traffic areas?
- How easy is it to get in and out of the potential location, both by car and on foot?
- Does the unit leave you room to grow—can you expand or adapt later?
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