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Tech Consolidation

Beginning with the END in MIND: The Argument for Technology Consolidation

Have you considered that when building your “tech-stack” that it can be very much like owning a house. Initially you tackle several DIY projects such as painting, replacing carpets, or remodeling your kitchen. But over the course of time, you recognize that your needs will go far beyond physical aesthetics. The question becomes “do you keep patching things up with single-point technology solutions, or do you go all in with a platform that’s built with the end in mind?”

It’s Time to Calibrate Your Technology.

Revisiting the DIY theme, just like your home, technology isn’t something that once it’s set up you can forget about it. You need to think about ongoing maintenance. Starting off, we’ve all been there, and have grabbed a few single-point technology solutions to address immediate issues and needs. It is practical like fixing a faucet that drips vs. overhauling your plumbing system. But as you begin scaling your brand, these Band-Aids begin to reveal their limitations. It’s simply untenable trying to manage all your disparate tech tools. You’re likely to experience more headaches as your operations just feel disjointed.

The Benefits of a Platform Solution

As you consider moving to a platform solution, you’ll find that it can provide you with a cohesive solution where everything resides under one roof, where you’ll have the ability to integrate your operations, sales, training, royalty management and more becomes a unified system that’s designed to scale with you. And you’ll often find that this saves you more dollars through consolidation.

The brilliance of a technology platform is that it delivers true synergy – where a single, streamlined process will create far greater efficiency. The bottom line is that all facets of your technology will work better together. It also improves your users’ experience. It’s just too much asking your users to log into a dozen different tech solutions – all which behave differently.

Is it Time to Consolidate your Technology?

Sooner or later, every multi-location business will face a moment of truth. When you consolidate onto a single platform, you are making the choice to bring order to chaos. This change isn’t about minimizing the number of tech solutions you use, but about using a purpose-built solution that meets your specific challenges, goals and objectives. It is the difference between generic one-size-fits-all tools opposed to getting something that fits you like a glove.

Consider the success of Zoom. It wasn’t just about making phone calls, but envisioning how we connect. Your technology shouldn’t just “work”; it should accelerate moving your brand forward. You can see evidence of this in that 20 FranConnect customers make up the top 50 franchises listed in the 2024 Franchise 500 following their leap to a platform that is specifically designed for franchising success. Additionally, multiple FranConnect non-franchise customers have also been listed as some of the fastest growing brands in their respective industries.

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Only One Way to Coast, and That’s Downhill

In my experience, one of the greatest concerns that brands face is the fear of being left behind. Whether you’re an emerging brand, or a large enterprise system, you have the opportunity to move towards technical maturity now. By moving forward with a platform solution vs. siloed single-point solutions, your brand will position itself for accelerated growth, greater efficiencies, and enhanced competitiveness. Technology is advancing at such a rapid pace, that the strategic integration of technology is much more than an operational advantage, it will be the hallmark of sustainable success.

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Franchise Territory Mapping: Everything You Need to Know

If you’re building a franchise, choose your locations carefully, as they can significantly affect your future success. Territory mapping helps franchisors determine where to place units to maximize profitability and reach. It’s a tricky process that depends on many variables, from customer demographics to the landscape of a city.

Understanding territory mapping is crucial for any franchisor. Here’s everything you need to know about franchise territory agreements, technologies, and mapping strategies.

The Basics of Franchise Territory Mapping

Virtually every franchise uses some form of territory mapping to allocate regions to franchisees. If a restaurant owner wants to franchise their business, they likely won’t open a new shop just down the block. They know that this placement wouldn’t help them reach new customers, and it would likely pull customers from the original restaurant. Instead, they will open another shop in another part of town.

This example displays the basic ideas behind franchise territory mapping and its complexity. Suppose the franchisor decides to add more units. In that case, they might encroach on one of the existing territories or need to expand to all-new areas. As businesses grow, so does territory mapping, which must consider many diverse factors.

What Is Franchise Territory Mapping?

Franchise territory mapping is the process of dividing regions into territories for franchisees, which can go by names like operating territories and exclusive areas. The franchisor grants the franchisee exclusive or non-exclusive rights to operate in the territory:

  • Exclusive: If your franchise has exclusive territory rights, you agree not to set up another unit in the area that would compete with the other franchisee’s business.
  • Non-exclusive: Non-exclusive territories do not offer these protections. The franchisor can establish their locations or allow other franchisees to establish shops.
  • Hybrid: Some franchisors use a hybrid approach. You could offer exclusive rights for a few years or have an exclusive territory for one product but not another. Although more complex, this option can help balance unique needs.

A franchise can also have overlapping territories, in which multiple franchisees operate in the same space. In these situations, the franchisees often target different markets. For example, an apartment leasing company might have a branch dedicated to student housing near a college campus, even though it sits within a larger territory.

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Why Is Territory Mapping Important in Franchising?

The franchise territory model serves a few different purposes, such as:

  • Preventing cannibalization: Market cannibalization occurs when a new franchise unit causes another unit to lose sales. Essentially, the new location takes customers from the old one. While the aggregate sales might look similar, the overhead costs increase, and unhappy franchisees are making less than they once were. Mapping franchise territories helps prevent cannibalization by outlining clear boundaries between units.
  • Keeping territory distribution fair and profitable: Franchise territory maps often involve research on buyers within a region. By understanding and splitting up your customer base across different franchisees, you can better ensure an equitable division that helps everyone increase revenue.
  • Avoiding white space: White space refers to the areas that aren’t well-covered, such as gaps between locations. Mapping franchise territories allows you to identify white spaces and prevent or fill them.
  • Maintaining positive franchisee relationships: Franchisees are understandably frustrated when another franchisee encroaches on their territory. Territory mapping helps prevent this situation and allows you to communicate your policies easily with existing and potential franchisees. When your territory agreements are clear through robust mapping, franchisees know exactly what they’ve signed up for and what to expect.

Reasons why territory mapping is important

The Importance of Franchise Territory Mapping for Business Growth

While territory mapping is necessary for any franchise, it’s essential for growing businesses. Growth entails new locations and franchise territory mapping ensures each new unit is placed in a profitable spot and selected according to relevant data.

How Franchise Mapping Contributes to Growth

Franchise mapping is a critical foundation for a growing franchise. It allows you to identify the most profitable opportunities and attract more franchisees. Mapping itself can help you reach customers more effectively, but it’s also a great marketing tool for attracting franchisees.

Territory mapping can give a franchise candidate more information on their potential customer base and profits by basing their territories on the characteristics of other successful franchise units. This offers reassurance and supports marketing efforts to potential customers. A map visualization also helps communicate boundaries.

Franchises with exclusive territory are particularly enticing for candidates because they offer protection. Your agreement to keep other units out of their territory gives the franchisee peace of mind, knowing that you won’t hurt their sales. When used appropriately, franchise territory maps can drastically transform your approach to business expansion, arming you with the correct information.

Franchise Territory Mapping and Franchisor Sales

If your goal is to increase sales, franchise territory mapping can also help. By avoiding cannibalization and gaps in coverage, mapping can help you reach every customer while leaving ample space for franchisees to work. This approach uses data to drive decisions.

Population data is valuable for any business owner, and territory mapping is ideal for reaching different populations. Defining franchise territories can reveal customer demands and opportunities even within one region.

One valuable benefit of territory mapping is enabling cooperation among your franchisees. Let’s say you identify different customer bases surrounding two locations of your financial advisory business. Location A is surrounded by young professionals, and Location B is surrounded by older adults.

Your franchisees can target their services for these customers and lean on each other’s resources. If Location A has a problem with retirement accounts, the team can call Location B for support and vice versa. They could also share resources during busy periods.

Your territory map can help you make decisions to maximize sales opportunities, improve the franchise’s overall reputation, and bolster relationships between franchisees.

Population data is important for territory mapping

Common Mistakes in Franchise Territory Mapping and How to Avoid Them

Building a territory map is often complex, and many franchisors make similar mistakes. Some problems to watch out for include:

  • Cannibalizing customers: Cannibalization is a quick way to anger franchisees and reduce revenue, so avoid overlapping territories or placing units too close together.
  • Not considering buyer characteristics: Consider your customers’ demographics when choosing a location.
  • Not communicating policies to franchisees: Transparency is the best policy, so communicate your approach to franchise territory mapping upfront.
  • Keeping your scope too narrow: Avoid tunneling on one aspect of the location, like traffic or nearby competition, while ignoring others.

Strategies to Avoid Mistakes in Franchise Territory Mapping

There are many different approaches to franchise territory mapping. Here are some tips and techniques to get started.

1. Choose the Dividing Lines Carefully

Territory maps can have boundaries based on many factors, such as census tracts, zip codes, or more prominent features like rivers and roads. Consider these aspects carefully and draw your boundaries so each territory has the necessary number and types of customers. For example, sticking to easily referenced borders like highways works well — unless it creates wildly diverse customer bases that would be hard to manage.

2. Consider Using Designated Market Areas

Designated Market Areas (DMAs) represent a geographic area that shares a media market, such as radio and TV ads. Ads are often purchased for an entire DMA and shared among those audiences. Marketing a new franchise is easier if you piggyback off established efforts from an existing franchise within the same DMA. You could also use DMAs to create your territory borders.

3. Determine Methods of Reaching Customers

The nature of your business affects territory size. For instance, a fast food chain stays put and needs to attract people within a certain distance. A service-based business such as a plumbing company may go further to reach customers. Consider how these behaviors will affect the necessary makeup of your territory.

4. Start by Defining Your Ideal Territory

Try working backward by figuring out what you want from the perfect territory. Determine its size and the type of customers that live there. Then, identify areas in your region that align with these characteristics.

Technology’s Role in Franchise Territory Mapping

As with many business activities, technology can streamline your franchise territory model and provide valuable tools for visualization and analysis. Territory mapping software can vary widely in complexity. Some support basic visualization, allowing you to plot territories on a digital map. Other software systems, like integrating third-party population data and performing white space analysis, support more advanced capabilities.

Whether you take a basic or advanced approach, territory mapping software can be valuable for communicating territory information with franchisees and identifying opportunities only a computer can find. Mapping technology can also help you organize large amounts of information on your region so you can use it effectively.

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Exploring the Legal Aspects of Franchise Territory Mapping

One of the reasons establishing a straightforward approach to territory mapping is so important is that not doing so can create legal implications for your franchise. Franchisors must understand the legal requirements associated with outlining territories and determining exclusivity. Work with an attorney with plenty of experience in franchising to help ensure your territory mapping plan complies with relevant laws and regulations.

Territorial Protection in Franchising

Without clear definitions, the meaning of your territory might be up for debate. Franchisors and franchisees may have conflicting strategies for success, and territorial protection helps give franchisees more control over their local market. Still, a protected territory is not the same as an exclusive territory, and the term requires clarity in the franchise disclosure document (FDD).

Your FDD must outline the protections you will offer in detail, usually under Item 12, to prevent misunderstandings and potential legal troubles. You must also avoid certain activities that could still be legally problematic, like encroaching on a territory under a different brand name or singling out one territory for encroachment.

Many franchisors grant themselves some flexibility while maintaining territorial protection in franchises by carving out exceptions, such as:

  • Captive markets, like malls, stadiums, and airports.
  • Online distribution, ensuring the franchisor can sell online to customers in a territory without encroaching.
  • Private label rights allow the franchisor to sell in the territory using a different brand name or trademark.
  • Performance contingencies require the franchisee to meet specific goals to keep exclusivity.

Exclusive Territory Rights

An exclusive territory is one in which the franchisee is the only one operating, but exclusive territory rights can entail other caveats. Franchisors should consider these elements and, if needed, include them in the FDD:

  • Whether the franchisor can advertise and sell within the territory: Even if other franchisees can’t operate, franchisors may still want to do business in their territories.
  • Whether the franchisee has the right of first refusal on adjacent territories: If you create a territory next door to an existing franchise, the existing franchisee would have the first opportunity to buy it.
  • If the fees and royalties for exclusive territories change, you could offer exclusivity at a price by charging franchisees higher royalties and fees.

Can a Franchise Buy Back a Territory?

Franchises can often buy back territories according to the stipulations of the original agreement. For example, if you want to expand your franchisor-owned units or terminate an agreement with a franchisee, you could buy back the territory, regardless of whether the franchisee wants to sell. Usually, this will occur at fair market value.

How to Sell a Franchise Territory

Selling a franchise territory differs slightly from selling a unit without a specific location. Choosing a location is sometimes part of the appeal of joining a franchise. However, having a territory already selected also means you’ve already done some legwork. When choosing the location with your territory mapping strategy, you should know the territory’s customer base and understand the overall landscape.

Before talking to franchise candidates, build a materials package showing off the territory’s best selling points. Is it in a high-density area? Do you offer franchise-exclusive rights? Focus on developing a marketing strategy to gather qualified leads.

The Role of Data in Franchise Territory Mapping

Whatever strategies you choose, an effective franchise territory model always depends on high-quality data. Consider a combination of several types of data:

  • Franchise data: FranConnect can help in this area. The platform can store, track, and analyze data for all units in your franchise.
  • Population data: You can turn to third-party organizations that collect and maintain information databases for demographic and economic data. Some territory mapping software includes population data.
  • Competitor analysis: Many businesses offer competitor analysis tools and services to help you see what you’re against in certain areas.

This information can help you understand the whole picture and avoid gaps when defining franchise territories. While you can map territories without any direction, a data-driven approach is essential for limiting risk and setting you and your franchisees up for success.

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With so many factors affecting territory mapping, you can understand why it deserves so much thought and attention. Effective franchise territory mapping is crucial to business growth, helping you identify profitable locations, reach your customers, and maintain good relationships with franchisees. Now you know what to watch for and how to conduct territory mapping successfully—let FranConnect help with the rest. We aim to arm franchisors and franchisees with the necessary resources to succeed.

After building your franchise map with one of the above methods, contact FranConnect for actionable next steps, like selling to franchise candidates and managing your finances. Our franchise management platform helps you gather and analyze data, develop your franchise, engage with franchisees, and maximize revenue.

Request a demo today to see FranConnect in action.

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Questions to Ask During an Interview Between a Franchisor and a Franchisee

Relationships are crucial to starting any successful franchise. During the initial interview with a franchisee, you want to learn about their business approach. After all, this person will be your partner for the foreseeable future.

Like a traditional job interview, this discussion should be a two-way street. The franchisor and franchisee should evaluate each other to determine if they would be a good fit. To help you make this decision, we’ve compiled some hard-hitting franchise interview questions and answers.

Questions a Franchisor Should Ask a Franchisee

First, here are questions for a franchisor to ask a franchisee. Your job as a franchisor is to determine whether this person will likely succeed in operating a unit for your franchise. While the criteria will look different for everyone, these questions can help you zero in.

1. Why Does This Type of Franchise Interest You?

When someone wants to be a franchisee, they often have multiple franchisors in mind. This question can reveal their passion for a specific industry or brand. Maybe they’ve eaten at your restaurant since childhood or see a potential unmet demand for your services. Excitement and genuine interest often rub off on other people and can help the franchisee network, hire passionate employees, and represent the brand well.

2. Where Do You Plan on Opening This Franchise?

Depending on how your franchise handles location planning, your franchisee may already have a spot in mind — bonus points if it’s in their hometown. A franchisee can lean on existing connections and possibly even a local reputation by opening a location in their community. If they’ve already found a location, they’ve simplified part of your job so you can maximize sales with a unit that hits the ground running.

3. Have You Ever Served in a Leadership or Management Position?

While franchise experience isn’t always necessary, some leadership or management skills will help. The franchisee will have many employees reporting to them, even if they hire a manager to handle day-to-day operations. Understanding this responsibility and the unique dynamics of management is crucial.

4. Do You Have Experience in the Industry This Franchise Falls Into?

Part of the appeal of a franchise is that the franchisee doesn’t need to build from the ground up. They benefit from the existing brand and any training or support you can offer. Still, you will want to know if they have experience that will help them in the role, like work in the industry, a business degree, or employment at a similar business.

5. Have You Ever Been a Franchisee Before? If So, for What Franchise?

Some franchisees have previously owned a franchise unit, so it’s worth asking about. They may be familiar with the structure and primed to dive in. If the franchisee had an unsuccessful experience with a franchise, ask about what they learned. Failure is often the best teacher, so don’t count them out.

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6. What Makes You a Good Fit for This Franchise?

Like most jobs, your franchisee needs to be a good fit with your franchise’s values and beliefs. Someone who embodies your franchise brand can help you succeed. If they align with the company, you will likely find a better working relationship, too.

Helpful features of franchise management software

Questions a Franchisee Should Ask a Franchisor

If you’re on the other side of the table and looking for questions to ask when franchising, you’ll also need to ensure the franchisor is a good fit. You’ll invest a lot in this partnership, so make sure it’s mutually beneficial and aligns with your goals. Here are some examples of what to ask when buying a franchise.

1. What Are Your Royalties and Fees?

This first question to ask a franchisor before buying will significantly affect your finances. Franchises can have wildly different royalty and fee structures, so make sure you understand your ongoing and startup costs. Royalties are typically a percentage of your revenue, while initial franchise fees cover startup costs like licensing and support staff. Ask about other ongoing fees, such as tech support or marketing.

2. What Type of Technology or Software Do You Use?

The technology behind a franchise can significantly impact your day-to-day operations. From point-of-sale systems to accounting software, ask about what you can expect. One of the most impactful programs for the franchisee is the franchise management system. This platform determines how you interact with the franchisor and manage your unit. Here are some helpful features of franchise management software.

  • Reporting tools to help you meet your goals
  • Communication with franchisors
  • Employee training resources
  • Guidance for the franchise’s brand, values, marketing, etc.
  • Payment processing and calculations for royalties and fees

If your franchisor doesn’t have a franchise management platform yet, FranConnect has various features to help you and your franchisor succeed.

3. What Goes Into the Location Selection Process?

Some franchisors already have locations selected or retain the right of final approval. Others are a little more relaxed. Talk to your potential franchisor about their approach. You may be able to choose your location or get help from to find one.

Another valuable topic to discuss is how the franchise manages territories. If you open a location and the franchisor allows someone else to open another right down the road, the second location could threaten your success. Many franchisors offer exclusive territories to protect you from these situations.

4. Do You Offer Ongoing Support and Training?

One question to ask a franchisor before buying is what kind of support you can expect. Some franchises are more hands-on than others. If you’re new to franchising, a supportive franchisor might be preferable to one that gives you more freedom.

Consider areas like training, marketing, and tech support. Look for a franchisor who offers assistance that aligns with your comfort level.

5. Can You Give an Estimate to the Total Investment Needed to Open a Franchise?

We already mentioned initial franchise fees, which are only part of the startup costs. Other expenses might include:

  • Real estate purchases or renovations
  • Professional services, such as lawyers and contractors
  • Equipment, furniture, and supplies for general operations
  • Insurance, including workers’ compensation, property and auto insurance

Ask the franchisor for a ballpark estimate of what you can expect.

Use FranConnect to Manage Your Franchise

Whether you’re a franchisor or a potential franchisee, the right technology can significantly affect your experience. FranConnect offers various franchise management tools, from training resources to payment processing and reporting.

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Before you dive into your next partnership, consider how FranConnect can set you up for success. Request a demo to see it in action or call us toll-free at 844-336-1017 for more information.

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3 Keys to Attract a Qualified Audience for Your Franchise Development Process

Whether you are a growing franchise or managing a multi- brand, large corporation, you need to spend your time on what matters. You know technology can help you be more efficient and effective, but there are also old-school principles which are important to master.

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10 Ways to Leverage Unit-Level Performance Data for Franchise Growth

With constant change the only certainty, harnessing the power of data for growth amid shrinking resources and shifting consumer behavior is critical for franchise brands of all sizes. Advanced point-of-sale and customer relationship systems offer franchisors the digital footprints to engage, garner feedback, track trends, try new products, and create unmatched customer experiences. Analytic data, swiftly served up, can also be a powerful ally to predict the success of local marketing and franchise development tactics and drive growth-focused operations and franchise relations decisions.

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Re-Visit Your Franchise Buyer Personas to Boost Development

Creating franchise buyer personas can be an extremely valuable exercise for Franchise Development Teams tasked with aggressive growth goals. Defining these personas allows you to better understand the motivations and needs of your ideal customer, and ultimately create sales and marketing content that resonates with them. 2022 is calling for franchisors to think smarter when it comes to how they engage prospective franchisees. In addition to creating or refining your persona definitions, selecting tech tools that support growth and make processes simpler are essential for business owners this year. Our Executive’s Guide to Franchising Tech in 2022 – CDO Edition is a great place to start if you are looking for inspiration on what you should be focused on in terms of tech options. But for the sake of this blog post, let’s hone in on why franchise buyer personas are so important and review some of the best things you can do to get them right.

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