Stuart Lee, Sales and Marketing Director of Atlas Mapping
Put simply, territory mapping is the definition of the boundaries to which an individual franchisee is awarded under their franchise agreement.
In order to allocate these boundaries, we use geographical areas relevant to the country in question along with data representing your target market.
These geographical areas should make it simple for the franchisee to understand the boundaries of their territory while making it easy for the franchisor to define the limits of the territory. In combination with the target market data, the geographical areas should be able to provide the necessary flexibility to professionally design your franchise territories.
In our industry, we define the geographical areas that we use to create your territories as ‘base areas’. Examples of base areas often used for territory mapping include:
- UK postcode sectors (full postcodes minus the last two letters)
- USA five digit ZIP codes
- Canadian Forward Sorting Areas (the first three characters of any full postcode)
- Australian four digit postcodes
The information representing your target market is usually referred to as a demographic or a set of demographics. Simplified, a demographic could be the total population of an area, or the total number of businesses – however, your target market definition will always be more complex than this, and varies from franchise to franchise.
The most important step is to create a demographic that best defines your target market, and as such the level of commercial opportunity in the area. This is known as the primary demographic. When more than one demographic represent your target market, the primary demographic can be formed by adding the multiple demographics together, often resulting in more than one ‘type’ of territory – for example, a cleaning franchise could operate a domestic or a commercial-oriented franchise offering, depending on the prevailing demographic within a territory.
With a franchise that offers an exclusive territory as part of the franchise agreement, the number one rule when defining territories is that every one must have sufficient commercial opportunity for the franchisee to run their business successfully. It is also preferable that each territory should be fairly equal in terms of commercial opportunity, though this is very difficult to accomplish, Can a territory in rural Yorkshire or East Anglia offer the same rewards as one in London? The answer lies in working with the geography and available opportunity across the country in order to maximise the profitability of every territory.
Once your base areas and primary demographic are established, you are able to combine the two in order to accomplish franchise territory mapping. Doing this accurately requires professional mapping software as well as experience working with the geography of the operating country,
Territory mapping can be used:
- Ad hoc in the early days of a franchise network in order to define the territories of the first few franchisees – this is especially useful for franchises that are site based and for pilot territories
- In the region surrounding your core business, allowing you to expand into nearby areas
- For a UK project where the whole country is planned out in order to give your network the optimal market potential
