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Advisory 2010-06-07

Location: look out for the best

Scouting for a perfect place to place your brand or a franchise outlet can be quite an ordeal. Location is a key link and vital deciding factor in the success or failure of any venture. Let’s weigh the pros and cons of select suitable locations in India

By Sub Editor
Location: look out for the best

While searching for a location to open a franchise outlet, franchisees should always conduct proper research, based on parameters like demand for the brand, people’s preferences, surroundings, catchment area, footfall, competitors and many other such things. A location that might be perfect for one franchise concept may not be perfect for another. The article will introduce you to popular and successful locations and guide you in finalising the best one for your franchise outlet.

Before proceeding further, let’s look at the few must-haves for a perfect location.

  • Sufficient parking area and ease of accessibility: It is important that the location has enough parking space and is easily accessible. If customers find the area out-of-reach or have to search hard for parking space, there is a possibility that consumers might lose interest.
  • Demand for product/service: There should be enough demand for your franchise service or product. Opening an outlet in an area that has your target customers is always advisable.

Sneak peek at some ideal locations

Listed below are few locations, which are suitable for various franchise concepts.

High streets: The concept of high street shopping is quite old, but popular. Most of the people who visit high streets are serious buyers and lead to conversions. The franchise concepts that can do well on this location are apparel, gifts and stationary, footwear, food and beverages, beauty, tutorials and training institutes, etc. We seldom see any beauty salon in malls but can find many on high streets. Competition is beneficial for both consumers as well as retailers. To keep the momentum going, certain brands, especially those of apparel and footwear, prefer to have their stores in close proximity. Examples of high streets are Khan Market, Greater Kailash, South Extension in Delhi, Linking Road, Colaba in Mumbai, Sector 17 in Chandigarh, etc.

Shopping malls: Shopping malls are one-stop destinations for those seeking entertainment, shopping and food in an exotic ambience. The sought-after category of brands at shopping malls can be apparel, footwear, jewellery and gifts and cards. With food courts hogging most of the limelight, malls have benefited more. An aspiring franchisee can make quite a lot of money by taking up the franchise of any food brand in these malls. However, opening a beauty salon or a gym may not be a right thing to do.

However, the mall concept has some shortcomings too. Owing to growing number of malls in every city, it has been observed that many of them remain vacant or have only a few opened outlets. This can be due to high renting and buying costs. Vijayant Chabbra, Executive Director, Archies, says, “Running an outlet in a mall is becoming more and more difficult for franchisees. Due to personal interests of builders and investors, the franchisees do not make profits, as large share goes out in rents. As lots of shops remain closed, customers shy away even from the ones that are opened. The mall owners should try to help retailers by selling and leasing out at least 60 per cent of the mall before they start charging high rentals from the existing outlets.”

Airports: Airports are an upcoming destination for both the franchisors and franchisees. The most suitable franchise concepts at airports are apparel, bookstores, F&B, gifts section and luxury brands. With rising tourists’ inflow, franchisees are finding airports as ideal location. Here, passengers waiting for flights become the key customers, as they are likely to spend time at the outlets.

Five-star hotels: Five-star hotels are another destination for high-end brands. Tourists, big businessmen, top corporate officials, etc, who stay or visit these hotels, mostly shop from the outlets in these hotels, which are of luxury brands in bags, apparel and footwear segments. Therefore, taking up the franchise of any luxury brand is the ideal choice. Rentals are too high, but then, so are the profits.

Neighbourhood locations: Another preferable location for franchisees is near residential areas, though the concepts are limited to ensure profits in such locations. These include play schools, schools, beauty salons, pharmacies and departmental stores. A franchisee keen on taking up the franchise of a play school or a school can benefit most by opening it near a residential area, as it is easily accessible for children. Similarly, having a franchised outlet of a store that caters to household goods near residential area is more profitable than in malls or high streets. So is the case with beauty salons and pharmacies.

A franchisee needs to be very careful while selecting appropriate location for his outlet. He should always weigh the options carefully and zero in on the location only after making some wise calculations. Opening an apparel or footwear brand in a neighbourhood location or starting a play school in a high street is certainly a big NO.

Ranjan : 13, Mar 2010 at 02:58 PM
"Experience is your Expertise"- this statement is proved by the article which is appropriately headed as "Rejuvenating options for entrepreneurs". Entrepreneurs have a lot of options to rejuvenate their business and this article has highlighted all with their respective merits and demerits. This article has really given lots of business insight to the entrepreneurs and is very well tailored and researched.
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