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Chapter 4. Service Delivery System and R... > The X Factors of Site Selection

The X Factors of Site Selection

Although several elements of site selection have been highlighted, some factors are often overlooked. These factors are not so obvious and therefore have been titled the X factors of site selection.[4] The three X factors are the employee base, the “green acre” syndrome, and the transportation systems.

  1. Employee base: Sometimes, if a particular franchise is in a prime location in terms of potential customers, it may be in a poor location in terms of potential employees. An upscale marketplace may be so upscale that there are very few people in close proximity who would be promising employees. These markets tend to have a comparatively larger supply of younger workers who live at home and do not need a significant income. Their threshold is lower for unappealing work, and staffing these retail outlets becomes difficult.

  2. Green acre syndrome: The green acre syndrome is applicable to a site that has a rich population in terms of residential, office workers, and retail patrons but very few retail (franchise or otherwise) establishments. If this area is on the fringe of a development and a lot of undeveloped land (hence the term “green acres”) surrounds the site, this may be a short-lived opportunity. The potential problem is that you think you are entering a market that is underserved, resulting in a disproportionately high demand for your product or service, and as a result you acquire real estate to support that demand. As the trade area becomes more developed, competition moves in, and you could find yourself in an overserved market. This could result in a business that cannot support the significant overhead costs from the real estate. When looking in a market that is sparse, be sure to factor in the idea that the available land may well turn out to attract numerous competing franchises. State and local municipalities should be able to provide data regarding future development.

  3. Current and future traffic patterns: As previously noted, traffic patterns are an important element of site selection. However, what are often overlooked are the future traffic pattern changes and their potential impact on the franchise. For example, a new road through a trade area could alter the traffic patterns such that the current main intersection in the area could become significantly less traveled. If you were valuing the location based on the traffic through the intersection, the quality of the site you bought could change for the worse.


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