Finding sites requires a mixed bag of tactics
If you can make it in New York, you can make it anywhere. That mantra certainly holds true for the fitness industry, says Todd Magazine. The president of Blink Fitness points out that Blink has leveraged its parent company Equinox’s experience in New York to make rapid inroads in the metropolis.
“New York is probably the toughest and most competitive fitness market in the world, and the belief early on was that if we could succeed in the hardest and most challenging market, there’s no reason we couldn’t expand elsewhere.”
And succeed it did. After 50 locations in the area, Blink has set its sights on further expansion through a two-pronged strategy of both corporate and franchising growth. Blink’s first three sites also functioned as incubators to test-drive the model: Manhattan; Yonkers, New York; and a suburban location of Paramus, New Jersey.
The urban and suburban test cases—and a mix of the two in Yonkers—gave a peek at how Blink might do. The performance was encouraging, Magazine says, and since then Blink is also pursuing locations on the West Coast. “There’s something about being in the two biggest markets in the country that makes your brand really punch above its weight,” Magazine says of the strategy.
Blink selects locations using extensive modeling. “Real estate is a combination of art and science and we use models that help us understand, in every part of the country, where we can put in locations—how many in a particular state and in a particular city.” Magazine says the art in location, location, location comes in once you have all the data pointing to a certain region, and then someone who has in-the-trenches knowledge of the location can determine whether the Blink model would work well or not.
“If we could succeed in the hardest and most challenging market, there’s no reason we couldn’t expand elsewhere.” — Todd Magazine, Blink Fitness
Blink caters to franchisees’ requests for geographies as closely as it can. Blink works closely with franchisees on site selection—”We provide them with a lot of information on what to look for, demographics, square-footage, traffic patterns, visibility to the street,” Magazine says—but it’s the franchisee’ responsibility to find the locations that are right for them.
Watermill Express, a drive-up drinking water and ice franchise based in Brighton, Colorado, sets up its locations in a wide variety of places from grocery store and mall parking lots to thrift centers and even as stand-alone units in neighborhoods.
The physical footprint of each unit is small, just about two to three parking spaces, so the constraints applicable to franchise concepts that need a lot of buildout do not always apply to Watermill Express, says Lani Dolifka, president and CEO. The unit locations do conform to local zoning laws as all businesses do.
Watermill started in Colorado and expanded slowly across the Sun Belt states. “We wanted to provide safe drinking water in places that needed it,” Dolifka says, and so growth is targeted accordingly. “The perception of the quality of the local water source is a driving factor,” she adds. Watermill Express has lately been generating interest across the country including from regions in the Northeast.
Driven by data
For its part, Spray-Net, an exterior painting franchise based in Canada, has successfully made inroads in the United States with a franchisee ready to set up shop in Minneapolis.
As of press time, details are still being ironed out, but Carmelo Marsala, founder and president, says the franchise’s core focus in the United States will be on Pennsylvania, New Jersey and Massachusetts even as they’re open to inquiries from other states. Spray-Net will continue to ship all supplies from its Montreal office until conditions on the ground warrant an additional distribution center.
Spray-Net slices and dices a lot of data to fine-tune territory assignments. It starts with defining who the target customer is: demographics, single-family detached homes, salary, whether or not they’re interested in home improvement.
“We wanted to provide safe drinking water in places that needed it.” — Lani Dolifka, Watermill Express
It’s all incorporated in Spray-Net’s proprietary software that then assigns locations or territories to franchisees based on a cutoff of at least 100,000 eligible households in the area, of which at least 75 percent would fit Spray-Net’s ideal customer profile.
Since Spray-Net is a mobile operation there is no physical location to worry about, unless a franchisee feels the need as business grows, in which case a small warehouse in an industrial park is all that’s usually required, Marsala says.
So Spray-Net uses its software to determine territories and franchisees pick up ones that they’re interested in. “We use all the demographics and the statistics but the franchisee decides if it makes sense for them to take it on,” Marsala says. “They physically drive around and see, ‘OK, can I cover this territory? Do I feel like there is a right number of homes.’ They have to feel it out for themselves because ultimately they’re the ones paying for it.”
Expert tips on real estate
There are certain circumstances when franchisors can relax location requirements, says Steve Beagelman, SMB Franchise Advisors president and CEO, for example, when a non-traditional location is available. For a food concept, this could be a spot in a food court or a transportation center (airport, train station, etc.). “If that type of location is available then the criteria are very different, but it still has to be a viable option for the concept to thrive,” Beagelman says. “Most times those high traffic locations can generate larger revenue potential, so they are worth adjusting the site selection requirements.”
Tom DuFore, CEO of Big Sky Franchise Team, suggests franchisees find a commercial real estate broker. “Typically, these brokers have years of experience and can help you from start to finish. This will include finding the location, negotiating terms, and signing the agreement. The real estate brokers also will often have information on available locations or soon to be available locations which have not been published,” DuFore says.
“Make sure it has the right kind of traffic, parking, visibility, and other important factors for your franchise,” DuFore adds, “Some of the questions you should be asking include: What is the traffic count, walk by and drive by traffic? Are there any anchor stores or tenants? What type of improvements might be included in the lease (if any)? Is it a vanilla box, gray box, or maybe a recently closed business with existing buildout? Is there parking and enough of it?”