Common Site Options for Your Franchise - dummies

Common Site Options for Your Franchise

By Consumer Dummies

If you decide that you will be starting your own business in the form of a franchise, you will need to find a place for your business to call home. Here are some of the types of locations you typically will be looking at for your franchise:

  • Malls: In case you’ve been living on the moon for the past 50 years, malls are large, enclosed shopping facilities anchored by two or more major retail stores and servicing a large geographic area. A mall is typically easily accessible by automobile via major arteries or interstate highways and surrounded by parking.

    Selecting a well‐developed mall requires a franchisee to balance the benefits and the drawbacks. The principal drawback is the cost, which includes not only the rent but a host of additional expenses, such as common‐area maintenance — your share of caring for the public space. Malls also charge merchants association fees, which are used for advertising for all the tenants in the mall. You also usually have to operate during the hours that the mall is open.

    On the plus side, malls are natural draws and attract large numbers of potential customers from as far as 25 or more miles away, depending on traffic patterns and competing malls. You can expect that some malls will include a percentage of your sales as rent in addition to your base rent. In addition to your franchisor having a say on what your location looks like, the better malls may restrict your capability to reimage. You should discuss with your franchisor any restrictions the mall may place on you.

  • Neighborhood centers: A supermarket typically anchors a neighborhood center with a variety of convenience‐oriented small retail and service stores. These centers usually provide the most reasonable rents, and they draw from a trade area of from one to three miles, depending on population access and concentration. Most neighborhood centers have few restrictions on signage — although the upscale centers or those in upscale towns can be as tough as the regional malls on signage and decor and are the type of location that many retail and service franchise systems target for their franchisees.

  • Community centers: These centers are also convenient for local populations. They usually have two or more anchors, a supermarket, a drugstore, and other general merchandise retailers. They serve local populations up to six or seven miles away, depending on ease of travel and accessibility. They have appeal similar to the neighborhood centers but are much larger and hence may have more signage limitations for their on‐street pole signs.

    These are the types of centers that most often have available outparcels, which are spaces for smaller freestanding buildings out on the parking lot. The quick service restaurant business uses out‐parcels, as do other businesses that need to be closer to the street to be seen by passing motorists.

  • Lifestyle centers: Usually found near affluent residential communities, these open‐air centers feature upscale national specialty chain stores, dining and entertainment, and fountains and other ambient design elements that make browsing the internal, uncovered walkways enjoyable — whenever the weather permits.

    In these setups, traditional anchor stores typically aren’t dominant the way they are at the malls. Multiplex cinemas, small department stores, large bookstores, and large‐format specialty retailers are usually the biggest individual draws. These centers combine some lower‐priced, impulse‐purchase vendors trading off of the high traffic counts along with higher‐priced, destination‐type merchants.

    Often, these centers have parking at each of the retail stores and sometimes larger parking lots as well. They will draw from up to 12 or 13 miles, depending on traffic patterns and convenience.

    Be careful in choosing a site in a lifestyle center. They are excellent venues for compatible concepts, but they can be expensive mistakes if your concept isn’t a good fit with the lifestyle of the majority of its visitors. Most of the time, your franchisor will know whether these centers are a good bet for you or not.

  • Power centers: Power centers are open air and usually located near a regional or super‐regional center. They include at least three “big boxes” or “category killers,” such as Walmart, Target, and Home Depot. Power centers draw customers from a five‐mile radius. A trend in many markets is to convert some of the underproducing regional centers to power centers, because people like the convenience of the regional centers but prefer the option of parking in front of the store of their choice.

  • Other centers: Constantly evolving variations of developments exist where retailing, entertainment, employment, tourism, bargain hunting, and other activities come together. Theme/festival centers are heavy on entertainment and restaurant businesses for leisure and tourist activities. Outlet centers have great bargains and sometimes draw busloads of people from very far away.

    Mixed‐use centers combine many activities in the same area: retail, restaurants, employment, transportation, sports, recreation, office, hotel, cultural, and other activities in various integrated combinations. Specialty centers can focus on restaurants, car care, off‐price, and other specific types of businesses on a planned development parcel.

    As with the more typical centers just listed, you want to be part of or nearby these centers to take advantage of the customer flows that they create.

  • Shopping areas: A concentration of stores serving a local community is considered a shopping area. Downtown, also know as a central business district (CBD), is a shopping area that benefits from the traffic from office workers, visitors to downtown, and people who live in the downtown area. Because of the traffic and their prime locations, in some cities, these sites can be expensive and often suffer from lack of customer parking.

    Because most of the traffic in the downtown areas is usually created by office workers, the hours during the weekdays are busiest, with most customers coming in before work, during lunch, and after work. This inconsistent traffic pattern makes staffing a bit problematic. Except for a few cities that have re‐created their downtowns as entertainment destination areas or festival marketplaces for residents from the suburbs — as Baltimore has done — these areas are quiet in the evenings and on weekends and holidays.

  • Off‐street sites: Airports, universities, ballparks, and co‐branded locations are all types of sites that are usually not easily accessible to customers just driving or walking down the street. These locations represent significant opportunities for many franchisees today and have been a growing trend in franchising.

  • At‐home sites: Although home locations aren’t sites in the traditional sense, more and more franchisees are choosing this option, where the franchisor allows them to work out of their homes.