Buying a franchise: how to assess local demand

A well-known brand may attract your first visitors, but it does not guarantee repeat customers. Before joining a franchise network, check whether the particular offering suits the particular location. It is not just about footfall: what matters is who passes by, why they stop there and how they currently meet the need your future outlet is intended to serve.

1. Define your customer and the real catchment area

Start with a working hypothesis: who will buy, on what occasion and why they will choose this particular concept. “People who live in the town” is too broad a group. For a fast-food outlet, your customers might be employees on their lunch break; for educational services, they might be parents willing to travel regularly. Each group needs different access arrangements, opening hours and marketing approaches.

Do not assess the catchment area simply by drawing a circle on a map. A railway line, difficult parking, a change of public transport or a busy road can make the journey considerably harder for customers. Walk the usual access routes and check whether visiting the premises would fit naturally into their day or require a special trip.

Write down three things:

• The main need: what the customer needs to do and when.
• The current alternative: where and how they meet that need now.
• The reason to switch: what extra benefit the new outlet will offer.

If the last point rests solely on brand recognition, refine your hypothesis. A customer may know the brand well but have no reason to change their habits. Also distinguish between customers who live nearby and those who merely pass through the area.

2. Combine observation, conversations and competitor mapping

Visit the location repeatedly at times that match your planned opening hours. Include weekdays, weekends and quieter periods. Record the date, time, weather and any unusual circumstances. A single busy afternoon during a local event is not a reliable picture of normal demand.

Distinguish footfall from purchasing intent. A crowd heading for a bus does not necessarily mean customers for a service that requires a longer visit. For a family-focused concept, easy access with a pushchair may matter more than the total number of people on the street. Also observe delivery access, how visible the entrance is and whether drivers can stop safely.

Next, have short, voluntary conversations with people who fit your target group. Ask about actual behaviour: when they last used a similar service, where they went and what they were unhappy with. The question “Would you like a new branch here?” often produces polite agreement rather than useful evidence for a decision.

Include indirect alternatives in your competitor map. A restaurant competes not only with other restaurants but also with a workplace canteen or a lunch brought from home. Record what each option offers, its accessibility, opening hours and the reasons people choose it. Do not judge a competitor’s strength solely from one queue or a handful of online reviews.

3. Check whether the brand’s experience applies here too

Ask the franchisor to explain how they assess the location. Which conditions do they consider important? Is their recommendation based on actual customer behaviour, operators’ experience or merely a general profile of the town? For every piece of supporting material, ask about its date, source and limitations.

A comparable outlet needs to be similar in more than just the size of the local population. Tourism, nearby offices, a transport hub or established shopping habits can all make a difference. Ask for examples of locations where the concept works under similar conditions and, where possible, speak to their operators about their customer mix and seasonal patterns.

The Czech Republic has no specific franchising law and no statutory requirement to provide prospective franchisees with a dedicated franchise disclosure document. A franchise agreement is generally concluded as an agreement not specifically defined by law under Section 1746(2) of Act No. 89/2012 Coll., the Civil Code. General rules on pre-contractual negotiations also apply, including duties to provide information depending on the circumstances of the negotiations. This does not, however, create an automatic entitlement to a bespoke study of local demand.

Have important claims about the location clarified in writing. Separate documented findings from estimates and commercial recommendations. Do not treat head office’s approval of a location as a guarantee of customer interest.

4. Test the weakest assumption before deciding

Identify the uncertainty that could change your decision. Is the issue low awareness of the offering, reluctance to travel or a lack of interest during your planned opening hours? Design a small test to address that specific question, such as further targeted conversations, observation of access routes or a non-binding survey of interest.

If you want to use the brand in advertising or hold a demonstration event, clarify the franchisor’s consent and any necessary conditions in advance. Do not present yourself as a branch that is already open or promise a service you are not yet in a position to provide. For an initial assessment, anonymous responses without collecting contact details will often be sufficient.

Before running the test, write down which results would lead you to proceed, investigate further or reject the location. Otherwise, you risk interpreting every response in favour of the brand you already want to buy into.

Practical takeaway: Before signing, prepare a one-page summary of your target customer, the alternatives available to them and your field research findings. If you cannot substantiate why local people would change their habits, carry out further checks first — do not buy a franchise solely on the strength of the brand’s success elsewhere.