Location refers to the specific physical or geographic place where a franchise business operates. In franchising, the location is a critical factor in determining customer access, visibility, and overall success. It must be approved or selected in accordance with the franchise agreement. Also see “Site.”
In franchising, location describes the designated site where a franchise unit is established and conducts its operations. The selection of a location is often a joint effort between the franchisor and franchisee, guided by market research, demographics, traffic patterns, and proximity to competitors or complementary businesses. The franchise agreement typically outlines how the location must be chosen, whether the franchisor approves it, and what happens if the location changes. Some franchise systems provide a protected territory around the location to ensure market exclusivity. A strong location can drive brand recognition, customer loyalty, and sales, making it one of the most important components of franchise planning and development.
Learn more about franchising in The Educated Franchise - 3rd Edition
The importance of location in franchising has been recognized since the earliest franchise models in the 1950s and 1960s, especially in food service and retail sectors. As franchise systems expanded, brands realized that a prime location could be the difference between high performance and failure. Franchisors began developing site selection criteria and offering assistance in lease negotiation, design, and build-out. Today, the term is not just about geography—it also encompasses site suitability, accessibility, parking, signage visibility, and alignment with the brand's target customer base.
Location is a cornerstone of franchise success, affecting visibility, customer traffic, and profitability. A carefully selected and franchisor-approved location ensures alignment with brand standards and increases the likelihood of operational success. Every franchise agreement should clearly define how the location is selected, approved, and managed throughout the franchise relationship.