An element of franchising success comes from the franchise's physical location. This goes without saying, of course, that the geographical area in which the branch is going to offer businesses that have been studied and found feasible, or at least an area where a potential form of profit is estimated within reason. These types of businesses benefit small-scale industries the most, especially if the nature of the line of business requires some small-scale manufacturing, like the fast food or retail industries. However, these businesses operate the best when their physical locations help them.
Studies have found that franchising is more effective in industries such as computer stores, in which the product or service offered by the company is provided to their customers and patrons at a set physical location. This is especially true to fast food and retail industries. Compare it to other industries such as, for example, carpet cleaning services, in which the product or service is delivered to customers at their premises. These industries therefore have multiple and variable product or service delivery locations, as many as their customers, while also incurring costs for transportation.
While franchising can and does occur in service industries without set locations for production and distribution, it is harder to minimize the conflict that can arise in such industries. Franchises are, after all, and despite what most people think, independent businesses. Therefore they have incentives to compete with each other to serve the same customers, a situation that is not present when one party owns the different locations. Franchisors cannot prevent their franchisees from competing with each other. Antitrust laws prevent franchisors from putting another branch in a geographic area where one outlet or a company owned outlet is already operating, these laws do not prevent franchisees to make efforts to serve customers from another area (take fast food delivery for example).
In businesses in which it is difficult to serve customers from a physically distant location, franchisors can effectively minimize between franchisee competitions by limiting the number of locations in a geographic area. For example - the McDonald's outlets. Because people go the neighborhood Mickey D's to get their burger fix, there is little competition for your burger business. People won't go out of their way to go to the other McDonald's on the other side of the town for their lunch.
However, when the outlet's physical location does not matter for the production and delivery of a service or product (like when both production and delivery occur at the customer's premises), franchisees end up competing with each other for the same customers. This is the problem for example in online travel agency business, as the nature of the business allows rivals from another geographic location to do business with another city. This makes franchising relatively ineffective for this specific business. In these types of business outlets, it is often necessary to place restrictions courtesy of the franchisor. In short, franchising is not as effective in these industries as it is in industries in which fixed locations are needed to produce and deliver products.
To learn more about how to get a franchise that will suit you and you will love being involved with go to http://www.franchiseinireland.com. A wide range of franchises available and we will fine the perfect match for you.
