“With the Covid, turnover has dropped a lot. We must therefore be particularly vigilant about the rent”. The statement of caution is signed Emmanuel Jury. He runs the consultancy agency Progressium, which helps franchisors find candidates and locations. Being vigilant in this area, according to him, means first and foremost closely monitoring the rate of effort requested by the franchisor, that is to say the percentage represented by the total “rent + property tax + charges” in relation to to turnover. “This must not exceed 12%. Better not to open than to open badly and expensively”.
It is also important to prospect in several cities. To get started, choose a location that matches your revenue goals, knowing that they are classified into three categories, from the most attractive (and the most expensive) to the least crowded: 1, 1 bis and 2. “In the service sector, it is not embarrassing to be in 2, specifies Emmanuel Jury. But in the retail trade, it is imperative to obtain a n°1.” The second rule, according to him, is not to be interested only in shopping centers, which have experienced strong disaffection for two years. “During the Covid, it was the shops located in the city center that suffered the least”, he recalls.
Nicolas Louis-Amédée, who heads Territoires & Marketing, a geomarketing agency, highlights another indicator. “We must first of all scrutinize the evolution of the commercial vacancy rate, namely the proportion of available premises, he insists. If it is on the rise, it is a bad sign.” According to experts, this is between 5% in dynamic cities and 15% in declining cities.
Finally, the geomarketer warns against a dangerous temptation: settling where you live. “You are never objective with your own city. Some customers tell me: “I don’t understand, I know my area well, but it doesn’t work”. The reality is that the merchant knows the customers who already come to him, but not the market itself.”
Be that as it may, 2023 should in any case confirm the revival of medium-sized cities that began in 2022. “Far from large conurbations, they have autonomous consumption areas and households with good purchasing power, notes Nicolas Louis-Amédée. In addition, the competitive environment is weaker there and the rents lower.” Notice to future franchisees.
How to write “the local state of the market”?
Since 1991, the Doubin law has regulated distribution and service networks, including franchises. In particular, it requires the franchisor to provide the candidate with a pre-contractual information document (DIP). This contains in particular a “general state of the market” and a “local state of the market”. “Unfortunately, there is a loophole. This law requires you to provide this information, but does not say how precisely,” warns Nicolas Louis-Amédée, director of the Territoires & Marketing firm.
The local state of the market must mention the clientele of the location (customer profile, potential prospects, evolution of the customer base, etc.); take stock of the competition (locations, activities, etc.); indicate the socio-demographic characteristics (according to INSEE criteria); finally specify the geographical and economic situation (transport offer, terrain, etc.). Please note: this is not a market study – this is the candidate’s responsibility – but an inventory. For example, if you plan to open a sushi restaurant, the document will present the situation at the moment T, without carrying out projections.
Smappen, Mygeomarket, Arctic, Territories & Marketing… Geomarketers have rushed into the breach. They are the ones who carry out market studies to comply with this legal obligation. While helping you determine the right locations.
An article from the “Franchise” special issue of L’Express. On sale since March 16.