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The Technology of Site Selection

Technology isn’t just for marketing and social media anymore, but a vehicle for a new wave of software solutions that can take the guesswork out of site selection.

The most common question a franchisee asks when signing up for a location-based franchise concept is, “Where will my location be?” shortly followed by, “How do I find my site and when will I sign my lease?” If not addressed with specific solutions, these questions can create stress for both the franchisee and franchisor.

Since it is standard to sign up a franchisee prior to pursuing a site, convincing him to sign on the dotted line without a site in hand can be a difficult task. However, what would better ease these fears than explaining the supplemental technological resources available for site selection as a selling point to a potential franchisee?
In this technology-driven world, suppliers are developing easy-to-use software and customizable tools to support the site selection process. These can be integrated into the process at any time. Tools available to franchises can be developed to:

  • plan market strategies, search zones and territories,
  • target specific consumers or areas of highest potential,
  • track site selection history and progress,
  • qualify locations based on specific parameters,
  • aid communication and information flow between team members and,
  • outline project steps and milestones.

Each technological tool available is developed and used with the goal of fast-tracking site selection while maintaining quality control.

Building a Market Base

Though site selection is both an art and a science, available technological tools can aid the science behind site selection to limit how much art needs to be utilized by your franchisees and real estate team. For emerging concepts, or those looking to penetrate new markets, IFA suppliers such as Buxton, GbBis or Forum Analytics apply either current customer information or basic customer projections to create psychographic and demographic profiles to target areas with the highest concentration of potential customers.

The output information from these services not only pinpoint where development is possible, they can also be utilized to help avoid cannibalization of current or future locations, create territories for individual franchisee development and search zones, or educate the team on the easiest possible growth strategy in any metropolitan statistical area and demographic market area. Introducing a system where these typical issues have already been addressed by the franchisor may greatly increase confidence for the franchisee and lay a framework for the real estate team moving forward. Whether on a map or in data form, these companies take much of the guesswork out of market analysis.

Realities of the Market

Factors affecting the site selection process include the overall health of the market, commercial development and market desirability, among others. Technological tools for accessing this information are limited and sometimes costly. The Internet and simple online research or publications from commercial real estate companies can provide baseline knowledge of the market. However, local market knowledge from an experienced commercial real estate broker will typically provide much more insight into the unique aspects of that market.

Once target areas have been identified, local market knowledge and site availabilities become a key overlay component. Local brokers have access to local listing services, as well as national services. Such services require paid subscriptions, or even in some instances, a real estate license for access. When facilitated by a knowledgeable local broker, such resources are very valuable to not only look up available sites, but will also have property records and historic information. There are other listing services available for public use, with and without paid subscriptions. Such software may aid the team with the search and information on comparable locations. However, they are not always fully up to date or accurate and can cause team frustration and false excitement.

Establishing realistic expectations with franchisees about real estate listing technologies and current market conditions is critical for any franchisee team from the start.

Analysis or Paralysis?

Qualification of sites based on a qualitative and quantitative analysis is a very delicate process. Utilizing demographic, mapping, site scoring and location impact software can greatly decrease risk of site failure. During the qualification step, understanding the output information from this type of software becomes critical. If the use of this type of software is based on old data or inaccurate customer information, a site that looks positive on paper may not perform well once the location is open. Franchisors must use caution when customizing software, as well as ensure all potential users have participated in appropriate training by the hosting company.

Understanding the legal ramifications for sharing such information with franchisees and people outside of the company is suggested when signing up for any software available. Some technologies grade locations based on corporate input, or may show proprietary information for another franchisee, so use appropriate discretion when sharing this information with franchisees.

Now the question arises, “How do I keep track of this information and next steps?” There are many new real-time, web-based tools available to organize the flow of information within the team. Project management software and Internet-based spreadsheet software are available in an array of complexities. From simple information upload/download platforms to full Gantt chart systems with timelines and predecessors are available for free or for subscription.

If your company is looking for a full-service solution for franchisee management that can be customized (which will include the steps and information for site searching), look to companies such as Process Peak and FranConnect. Both concepts can be used to their full potential or simply for a specific need within the organization such as site selection or build-out. These systems, when fully utilized by all parties, keep the team organized and aware of next steps. But be warned, if only part of the team participates, these systems can become more of a hindrance than a help.

How Much is Enough?

The availability of such technologies to support the site selection process does not mean your concept must spend countless dollars to ensure location success. These tools can be customized to fit within any organization to fill the gaps rather than be the solution.

As Lenny Verkhoglaz, co-founder of Executive Care, stated in the May 2013 Franchising World article “Streamline Your Franchise’s Operations with Customized Software”: “Franchises are diverse entities, with unique needs… It should come as no surprise that when considering software applications, every franchise demands a different solution to achieve optimal results.”

Franchises that identify needs for technological solutions to supplement the site selection process should ensure the following are discussed within your organization before making any major transitions:

  • Know what budget is allotted for such technologies. Many free resources are offered, although they may be limited in their capabilities.
  • Take into account your concept’s maturity. Startup franchises may not need such elevated technologies; adding in these technologies once several locations have been established could be the best route.
  • Use a realistic development blueprint, considering historic and projected franchise sales. Overextending a budget for unrealistic development strategies may impede that very plan.
  • Keep in mind the transition period and learning curve required to implement new technologies. Franchises that take advantage of trial periods and demos will develop a better understanding of which resources are ideal for the concept. n

Kyomi Reinhard is the vice president of Javelin Solutions, an outsourced real estate and lease negotiation firm exclusively serving the franchise industry. Find her at fransocial.franchise.org via the directory.

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