The Art of Franchise Territory Development.

The moment of realization when someone comprehends a concept or idea is a testament to the way humans process information. Our inclination towards visual perception underscores the importance of mentally and visually “seeing” things to achieve understanding. This inherent need for visual comprehension is why franchisors widely embrace geography based business data tools as a means for franchise territory development. Whether it’s a startup or an established market leader, all franchisors recognize the value of these report generating tools, regardless of the desired level of complexity. The versatility of franchise opportunity reports based on geographic selection tools, coupled with the abundance of demographic data, offers franchisors numerous scalable analysis options.

Franchise territories are typically established using specific geographic parameters, such as a collection of Zip codes, a ring dimension, or a defined area. As all political geographic boundaries, including Zip codes, census tracts, counties, states, designated market areas, and Metropolitan Statistical Area, are readily available, they can be mapped and visualized using a range of demographic, consumer, business, retail and franchise datasets serving as a solid foundation for defining territories. With GeoMetrx, franchisors can digitally compare territories. For some franchisors, having a digital database of existing territories is sufficient; they may not require a deep understanding of the area’s demographics, but rather the ability to visualize it on a map. This enables them to generate hard-copy maps for franchisee agreements, identify potential overlap issues with new territories, and outline future territory expansion possibilities.

Analyzing Customer Base

Some franchisees opt to enhance their mapping capabilities by incorporating geo-demographic data, both consumer-related and business-related. Integrating demographic information with geographic data (such as block groups, counties, DMAs) significantly improves the ability to identify and target specific customer groups. For instance, if a franchisor knows their target customer base consists of households with a certain average income level, and other related demographical data can identify and map all block groups in the United States that meet this criterion. As a result, the process of establishing franchisee boundaries will include a count of potential customers, enabling the development of fair and defensible territories.

For those who are uncertain about their true customer profile, GeoMetrx can incorporate geocoding, which assigns latitude-longitude coordinates based on addresses, placing customers on the map. Once customers are mapped, their corresponding block group demographics can be attached to create a customer demographic profile. This process allows franchisors to map their best customers and develop a target profile, making it possible to locate these desired targets anywhere in the United States and conduct intelligent franchisee territory searches.

In the case of franchisors focused on business-to-business operations rather than consumer-oriented ones, the same process applies, albeit using a different set of geo-demographic data. Business profile data can be extracted for numerous geolocations. If a franchisor targets a specific business population, that targeted group can be mapped, and territories can be developed based on desired levels of business counts and potential. In order to optimize the number of territories within a specific market area, franchisors can greatly benefit from understanding and documenting the potential customer base of each franchisee territory. It is essential for franchisors to strike the right balance, ensuring they neither allocate excessive territory nor fail to provide an adequate customer base. By comprehending the demographic customer potential and establishing a defined minimum criterion for customer levels, it becomes possible to strategically map the optimal number of territories per market. This approach ensures that each territory is equipped with a sufficient customer base to thrive and succeed.

Taking a proactive approach to territory development can transform the franchising process from reactive to proactive. 

It is a mutually beneficial strategy. By identifying areas with the highest potential, the franchisor can strategically assign a strong franchisee to those territories, resulting in a win-win situation. Understanding the target potential at various geographic levels allows the franchisor to rank markets and territories based on their strength, enabling the development of intelligent and effective long-term plans for franchisee expansion. However, new concepts or franchisors entering new markets may initially need to expand their franchise territories to ensure sufficient market potential and early franchisee success. By analyzing the current market demographics and utilizing a five-year demographic forecast, the franchisor gains insight into the evolving market dynamics.

While it is possible for a franchise system to allocate excessive territory initially, understanding the territory’s potential empowers the franchisor to include provisions that require franchisee growth commitments over time, ensuring the maximization of the territory’s potential for the franchisor. If a franchisee fails to achieve the desired growth, the franchisor retains the right to divide or assign additional franchisees to the territory. Only by comprehending the market demographics, customer potential, and defining the orig


GeoMetrx is the latest tool in the franchise opportunity sector that helps in identifying and mapping new territories for various types of franchise.

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