Franchise Location Selection, How Online Marketing Helps

by Toby

October 4, 2014

As regional franchise developer, geographically how do you decide where to put your new franchise locations? If you’re in a new market, where do you put your second and third franchise sites geographically? Close to each other or far apart? How do you decide?

There are obviously many considerations that determine franchise site locations, but if online marketing is important to the success of your franchise marketing efforts (and it better be), here are some factors to consider.

The consequences of not effectively locating franchise locations in a strategic manner are many, but primarily franchisees will suffer higher customer acquisition costs, lower competitiveness, and less effective online franchise marketing in general.

Geographically speaking you don’t want to be too close that you cannibalize each other, but close enough that you can leverage geographic online marketing efforts that scale effectively and grow leads more than stand alone isolated efforts.
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 What Are The Online Benefits of Good Retail Location Placement?

  • More efficiently capture customers that fall in the grey areas between and around locations.
  • Target a broader geographic area for more customer reach, greater brand awareness.
  • Leverage larger remarketing lists.
  • Higher volume of leads.
  • Lower customer acquisition costs.
  • Higher ROA (return on advertising spend).

Franchise Site Selection Determines Scalable Online Franchise Marketing

Scalability is important to success in online marketing for franchises. The distance between new franchise locations determines whether you can scale your online marketing efforts in an efficient way or you have to have stand alone less effective online marketing efforts. (I wrote a related post here on franchise SEO and how to scale and win in a metro market.)

Take the example below in the San Diego metro area. I highlighted Carlsbad, CA at the top and La Mesa, CA below – both suburbs in the greater San Diego metro area. However, driving distance between the two locations is 40 miles apart.

Franchise Location Selection San Diego
Too Far To Scale Franchise Online Marketing Efforts

If your retail customer will travel up to 6 miles to visit your franchise store then these two franchise locations are too far apart to scale online marketing efforts between them and independent paid search or social campaigns would be necessary.

Ideal Site Selection

A more ideal distance in this situation would be to locate the two locations approximately 12 miles away from each other (hypothetically in this example based on the max distance a customer will travel of 6 miles).

In the map below one location is in Carlsbad, and the second location is in Solana Beach, which minimizes cannibalizing customers yet is close enough to allow for more effective scaling of online franchise advertising between the two locations. The third ring in the middle allows us to target franchise customers between the two locations.

Scalable Franchise Site Selection
Scalable Franchise Site Selection

Now San Diego geographically is an odd shape for a metro area, primarily because of its mountains to the east, and the Pacific Ocean to the west.

However, take the example below in the Houston metro area. In this case we have 3 locations in popular areas of the metro area and all are 12 miles apart so far enough away to minimize cannibalization of customers, but close enough that we can cast a much wider net over all 3 locations to effectively scale and capture even more geography (the 3rd larger circle that encompasses all 3 smaller circles).

Ideal Franchise Location To Scale Online Marketing
Ideal Franchise Location To Scale Online Marketing

It’s important to remember, if we cast too wide of a net geographically we will end up with higher customer acquisition costs since we would be targeting customers that may be too far away and less likely to convert to a lead.

 Without Advertising Coops You Can’t Scale

The location and site strategy we’ve discussed so far is also dependent on franchises establishing ad coops . For most retail franchise concepts, forming advertising coops to attack the market as a collective whole online is far more effective than having individual franchisees with much smaller budgets go off on their own and try to effectively market in a small geographic area that is constrained by how far customers will travel and by how close they are to the next franchisee. Worse yet is having franchisees compete against each online.

Franchise ad coops formed in metro markets are one of the unique strengths that franchisees have against larger corporate brands, or more nimble and smaller mom-and-pops (which I see mom-and-pops beat up franchises online all the time online).

So if acquiring more customers at a lower cost is important to your franchise marketing efforts, consider online marketing as an aid to help you grow strategically and improve your franchise selection location process.

Are you a franchise regional developer? Need help with your online marketing? Call us today to discuss how we can help you.

About the author 

Toby is the co-founder of 39 Celsius. He has over 20 years of digital marketing experience and has started several companies throughout his career. He's an expert in SEO, Social Media Ads, Google Ads, Marketing Automation, and more. He has a BA in Chemistry/Biochemistry from UC San Diego and an MBA from SDSU.

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