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Does a location for a franchise have to be assessed by the franchisor?
Before a franchisor started to franchise it would have to have worked out the right type of location for an outlet to be situated, or the scope of the territory being granted. In addition, where there is a retail outlet the franchisor will probably also want to approve the particular outlet selected by the franchisee. Franchisors will normally have criteria for judging whether a territory is suitable. Considerations will include whether there is sufficient demand for the business in the proposed territory. However, the criteria for suitability will differ depending on the type of franchise operated. For example, it would not be appropriate to offer retail franchises, which rely on high street trade, in a predominantly rural territory. Franchisors may also wish to make an assessment of the location of the franchisee’s premises within that territory. Retail, hotel, food and beverage, and product-based franchises rely on customer’s visiting the premises, so franchisors are likely to require control over the location of their franchisees’ premises in order to protect the reputation of the brand. Franchisors would typically want to assess the type of street the premises is located on, the foot and/or road traffic volumes, environmental factors affecting the site and surrounding area, the exposure of the premises to potential customers and any landmarks that may generate potential business or create a negative impact on the brand.
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