In franchising, location refers to the site or territory where a franchisee operates under the franchisor’s brand. It is often defined in the Franchise Agreement and plays a crucial role in visibility, customer access, and overall success. Location may be a physical address, service territory, or defined market area.
Location is one of the most important elements of franchising, as it determines how effectively a franchise can attract and serve its customers. For restaurants and retail businesses, location impacts foot traffic, visibility, and convenience. Service-based franchises may focus more on territory rights than a storefront, while home-based or mobile franchises still define their location in terms of service areas. Most franchisors provide guidance, demographic data, and real estate support to help franchisees secure a profitable site. The Franchise Agreement will typically include either the approved address or a protected territory, ensuring clarity about where the franchise may operate. Ultimately, the success of many franchises depends heavily on securing the right location.
Also see “Site.”
The phrase “location, location, location” became famous in the 20th century to emphasize the importance of site selection in retail and hospitality industries. Early franchisors like McDonald’s and Holiday Inn built their success on choosing prime corners, highways, and visible destinations. As franchising matured, franchisors began offering real estate expertise, lease negotiation support, and sophisticated demographic research to assist franchisees. Today, technology tools such as GIS mapping, traffic flow studies, and population data allow franchisors to optimize site selection. Even for non-storefront franchises, location remains critical in defining customer service areas and market exclusivity.
For additional Information See: The Educated Franchisee, 3rd Edition
| Franchise Type | Role of Location | Key Factors |
|---|---|---|
| Retail | High visibility and customer convenience drive walk-in traffic. | Foot traffic, parking, nearby competitors, shopping center anchors. |
| Restaurant | Critical for attracting regular customers and maximizing sales volume. | Traffic counts, accessibility, drive-thru availability, neighborhood demographics. |
| Service-Based | Defined by a protected territory rather than a storefront. | Population density, household income, local demand for services. |
| Home-Based/Mobile | Relies on assigned service areas instead of physical storefronts. | Territory boundaries, delivery zones, online presence. |
'The franchisor assisted the franchisee in choosing a location with strong foot traffic near a shopping center.'
'The Franchise Agreement specified the franchisee’s exclusive location within a five-mile radius of downtown.'
'Even with a well-known brand, the business underperformed due to a poor location choice.'
Location in franchising is the defined site or territory where the franchise operates and is one of the most influential factors in business success. Whether a retail store, restaurant, service territory, or home-based business, the right location can determine visibility, customer access, and profitability. A strong location strategy is a cornerstone of franchising success.
