I have written about the value of putting more eggs in fewer baskets when it comes to identifying growth targets for brands – meaning, if you were to dial in your development focus to growing in just five states where validation is strongest and opportunity is richest, then, your dollars could truly go to work for your brand.
There is another valuable data point to helping you identify the ideal growth markets – census data.
Recently, I was studying a map of the United States that showcased population growth by state. Some data points I found interesting are the following:
- Illinois has had a decrease of 0.2 percent from 2010 to 2017. Should Illinois be a target for franchise brands? Perhaps not due to rising costs, rising taxes and fewer people. If I were a franchisor (even though I live in the state), I am not sure this state sets my brand up for the greatest success. Increased real estate costs, increase taxes and fewer people would scare me as a consumer brand – unless, of course, I have a killer product and a brand buzz that makes people absolutely crave what I have to offer.
- West Virginia has a decrease of two percent. That’s interesting as well.
- Texas has a growth swing of 12.6 percent, Florida comes in at 11.6 percent and Utah’s swing rate is 12.2 percent, and there are a few others with double digits. Would this be my focus?
- I would also study tax trends. Franchisees will give up X percent royalty and X percent to the brand fund – plus a franchise fee. If you can look at the investment opportunity alongside them and find value points plus population increase data, then, you may have an even more attractive story to tell to that audience.
- Still, concentric growth sets a brand up for the highest likelihood of success. If an Item 19 were to break up average unit volume into cities with recognized brand awareness with multiple units, that data would be interesting to me as a buyer. It is still surprising that franchisees fight so hard against other franchisees to come into the marketplace. Why? Jealousy? Territorial? It’s not smart, in my opinion. More units equal more brand awareness which then equals more customers. If the franchisor is strong operationally, this should equal more $$$ in your pocket. If I were going to buy a franchise in the state of Illinois, I would want to buy one in the right category that has other locations around it. I am not sure I would want to be a pioneer unless I was prepared to open multiple units quickly.
Census data is extremely valuable for both franchisors with target markets and franchisees with city selection. In today’s world, accessibility to data is as high as it’s ever been. Use it to help plan your strategy, execute on it and grow your brand alongside good, smart franchise owners.