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What the catchment area of a franchise is and how it is calculated

Calculating the catchment area of a franchise is a crucial step to take every time you want to start a new business, making informed and strategic decisions based on analytical data. 

 

Defining the catchment area for a franchise allows you to have an estimate of the flow of potential customers interested in the products or services offered, which represent the primary target towards which to direct your marketing and sales activities. Knowing this information allows you to estimate the real potential of the market and offers valuable indications for the strategic and operational planning of the business in the long term.

 

Analyzing the demographics and geography of a business’s catchment area is essential to identify the correct location of the point of sale and evaluate the penetration rate in a specific market. While demographic segmentation provides valuable details such as age, gender, income and education level of potential customers, geographic analysis helps understand where consumers are concentrated and what their habits are. This data, combined with information on purchasing behavior, can reveal not only who potential customers are, but also how and when they interact with the product or service offered by your business.

In this guide we will explore the main methods used to calculate the catchment area of a franchise, illustrating how they can be used to precisely outline the profile of your ideal customer. We will also address the importance of geographic and behavioral analysis, elements that contribute to designing an effective and targeted business development strategy.

Point 1. The catchment area offers an estimate of the flow of potential customers of a business activity

Point 2. This analysis improves decision making by providing key information for opening new locations

What the catchment area of a franchise means 

By catchment area we mean the geographical territory in which the point of sale manages to attract potential buyers interested in the products or services offered by a specific commercial activity. This concept is essential to evaluate the feasibility and potential of a point of sale in a specific geographical area. It includes the analysis of various demographic, economic and social factors that influence market demand.

Defining the catchment area helps franchisors and franchisees to develop targeted marketing strategies, to choose the most suitable location and to personalize the commercial offer based on the needs and preferences of local consumers. It also allows you to define the distances and travel times necessary for customers to reach a point of sale and helps entrepreneurs to define the main service coverage area with an analytical method.

This analysis tool also allows us to understand the local market by helping companies evaluate the potential of existing points of sale, identifying the least performing locations and the best locations in which to open a new business. The catchment area of a franchising business is generally divided into three sectors, which allow for a detailed and geographically distinct overview of the attractiveness of the point of sale under consideration:

  1. Primary zone. The area immediately adjacent to the point of sale, from which most consumers generally come. This proximity makes the store a convenient and more immediate choice for making purchases.

  2. Secondary zone. This area includes all those customers who are further away but who could still go to the store to make purchases. However, the greater distance from the headquarters makes it necessary to adopt targeted sales strategies, which require more effort than those necessary to attract customers located in the primary area.

  3. Tertiary zone. For entrepreneurs, this area represents the greatest challenge, because they have to intercept people who are not in the immediate vicinity of the point of sale and who may have valid, closer alternatives available. Convincing these potential customers to prefer your business may require significant marketing efforts and the support of a solid brand that can guarantee sufficient visibility and reliability to convince even those furthest away.

How to calculate the catchment area 

As anticipated, this analysis significantly influences decisions regarding localization, marketing strategies and business development. By studying various factors, such as demographics, geography, competition from other sales outlets and consumer habits, it is possible to outline a clear picture of the target market and optimize your strategy to effectively reach your geographical target.

There are some methods for calculating the catchment area for a franchise that allow you to define a geographical area with respect to the distance from your business, the travel times needed to reach it and other psychological aspects. As we have seen, the result is the subdivision of the area, which means opening a franchising business in bands or degrees of reachability. Here are the main methods used to calculate the catchment area:

  • Calculation of the isochronous distance. This method measures the franchise’s catchment area based on the time needed to reach the point of sale. It is used to determine the area within which a customer can arrive at the store in a predefined time, for example 10, 20 or 30 minutes, either by car or by other means of transport.
  • Calculation of the isometric distance. It differs from the isochronous method because it is based on physical distance rather than travel time. This approach defines the catchment area by measuring a fixed distance from the store, such as 5, 10 or 15 kilometers.
  • Analysis of the psychological catchment area. This type of calculation focuses on the perception that potential customers have of the distance and attractiveness of the store. The distances calculated using this method may differ from the real ones due to some factors, such as: ease of access, the presence of competitors in the identified area, the visibility of the point of sale and the purchasing habits of consumers.

By combining this information with competitor analysis and demographic data such as age, income and purchasing trends, you can tailor your offer to the specific needs of your target market. This approach provides a deep understanding of market dynamics and your competitive position, helping businesses define targeted marketing strategies and make informed decisions about locating and expanding their stores.

MBE Boxes Etc provides support in identifying the optimal locations for new points of sale and in designing a marketing strategy based on an in-depth analysis of the territory and the local market. Using these advanced methodologies, financial support and an ongoing training program, franchisees have the opportunity to become competent entrepreneurs, maximizing their return on investment.

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Mail Boxes Etc./MBE Centres are operated by independent operators as franchisees, who operate under a franchise agreement under the brand name of MBE. Through its franchise network Mail Boxes Etc. provides support services for businesses and individuals. Logistics and shipping services represent the main services of MBE – enabled by MBE through contractual agreements concluded for the benefit of its franchisees with the main domestic and international express couriers - and other graphics and printing services - provided either directly or on the basis of agreements with large printing centres. The promotion of services for business and private customers is carried out in the framework of the business activity of each MBE franchise partner within and outside of the MBE Centres ("sales prospecting"). Each franchise partner is contractually obligated to perform such activities. Mail Boxes Etc. and MBE are registered trademarks used with permission of MBE Worldwide S.p.A. (All Rights Reserved). The services offered by the individual MBE Centres can vary depending upon the location. The material available on this Internet site, the information contained herein and any other relevant related data may not in any manner be copied, distributed, changed, republished, reproduced, downloaded or forwarded to third parties, without the expressed prior written authorisation of Mail Boxes Etc. (UK) Limited. We accept no responsibility with regard to the unauthorised use of the material available on this Internet site, the information and/or the data contained herein.