Service Area Solutions
A service area franchise is one where your franchise serves customers across a geographical area. That means that either you don’t have face-to-face interaction with your customers or that you travel to them, but in either case, they are served just as well from one end of your franchise territory to another. This differs from a location-based franchise, where customers travel to a specific location (like a restaurant or gym).
Service area franchises are great in that you can cover much more geography (and therefore have more opportunity) than a location-based franchise which are limited to more densely populated areas.
Typically, franchisors and franchisees think about service areas in terms of ZIP codes. Depending on the franchise, there may or may not be protected areas written in the franchise agreement, but it is common at the very least to ensure that each franchisee has sufficient market potential to make their franchise successful.
At Analytics In Focus, we have a few different ways of helping both franchisees and franchisors understand the market opportunity of a territory (a collection of ZIP codes defining the service area).
First, let’s start with a demographic database of the most commonly used criteria:
If you sell to Consumers
We’ve already done the hard work of wading through the census bureau’s thousands of tables, and we’ve built a database of the most commonly used demographic variables.
This database will let you see population, household counts, income, age, gender, and race information for every ZIP code tabulation area.
If you sell to Businesses
We’re working hard to create a database of companies by industry group and size. We’re targeting mid-2013 delivery of that database.
Let us know you’re waiting for it, and we’ll be able to let you know a firmer delivery date. Expected cost: Less than $50.
If you don’t see a data variable that you need, then feel to call us at (908) 899-1890 and we can tell you the most cost efficient way we can get that data for you.
If you are a franchisee, then this may be all you need. You’re likely to be provided with a service area (territory) from your franchisor, so you probably don’t need to spend any more time researching territory boundaries. You’ll be able to add together the demographic variables from the ZIP codes for your territory. Your franchisor may be able to tell you how that compares to other franchises. Even if they can’t, you now can do your homework of contacting other franchisees and understanding how the demographics of your proposed territory compare with theirs (and their profitability). If the demographics in your territory are close to or better than an existing franchisee, and you’d be happy with their profit levels, then the demographics are working in your favor.
You estimate that your franchise’s most typical customers are households with $50,000 to $100,000 in income. Your franchisor has identified 7 ZIP codes that would make up your territory. You add together the number of households with those income categories across the seven ZIP codes. You find that when you talk with existing franchisees, each of them with similar totals is generating a healthy profit. You are relieved that the one franchisee with sub-par profits has a much worse demographic
profile than your territory. It isn’t the franchise model that is broken; it is that franchisee’s failure to do the right demographic homework that caused his problem.
Knowing the demographics of each ZIP code is a start, but you have the added responsibility of dividing up the country into equitable pieces, such that each piece has sufficient market potential. This isn’t to say that every territory will be exactly the same, as geography size and accessibility also play a role in territory design.
You have two options for the design of your franchise territories:
Do it yourself
The demographic database that you purchased above (or we made for you if it was a custom request) was formatted for easy opening in our Sales Territory Map software.
With Sales Territory Map, you can use any numeric field (or weighted combination of many data fields) to balance your territories. Sales Territory Map lets you build territory boundaries geographically, while always showing you the balance metric for each territory.
Test out our free version, or upgrade to our premium version for as little as $10 at:
Let us do it for you
We’ve built thousands upon thousands of territories. We know what cities go together. We know what cities can be broken into pieces (and where).
If you need the fastest way to get the best franchise territories, then give us a call and we can give you a firm price quote (in-the-neighborhood prices: $10,000 for 250 territories to $30,000 for 1,500 territories)