The mantra of location, location, location is just as important in business as it is when buying a home. Get it wrong, and your business will be an uphill struggle, write Vaughn McGuinness and Phil Blain.

Maximising the profit of your franchise is a delicate balance between getting the right store and selling the right product in the right location (of the right size), at the right price. Get just one of these factors wrong and you will be losing sales. It is estimated that the wrong location alone can have a 20 to 50 percent effect on your sales.

What does the right location look like?

Getting the right location is a combination of factors which all come down to your ratio of rent to takings — a higher rent must bring higher sales in order to justify the extra expenditure.

If you are paying A-grade rent but are in a C-grade location then you are in trouble. A C-grade location is unlikely to have sufficient traffic flow to bring you the sales to cover your rent.

You also need to take into account the amount of frontage your business needs, the retail mix of the area and if you have appropriate neighbours.

A jeweller, for example, wonÍt perform to its best if it is located amongst toy stores and childrenÍs wear. You need to be situated amongst peer businesses, those which attract the same type of customers as you, in order to maximise the traffic flow in your location.

In any franchise system, there should be a site selection policy with guidelines as to what makes a good location for your particular business. This will include a checklist of minimum requirements for any site and should be combined with as much demographic information you can gather on any potential location, not just what you receive from the landlord or shopping centre. Your franchisor will normally work with you initially to select a site that you both agree on.

I think I am in the wrong location — what now?

Any course of action will depend firstly on your lease agreement, provided you are the lease holder. For franchisees a long way from the end of their lease period, options will be limited but there are still some courses of action.

Franchisees coming up to the end of their lease could consider relocating, however the cost of relocation needs to be taken into account and it is advisable to try and rectify any problem before taking this option.

But donÍt be too quick to blame all your problems on location. You should be benchmarking your business against other franchisees in your group. Consider how your business is performing against them before deciding that your location is causing the problem.

If you still have real concerns about your location it is extremely important to get in contact with your franchisor. Remember that you mutually agreed upon your current location, and they may have some insight into what is going wrong and what you can do to turn the problem around.

When talking to your franchisor you will need to outline why you think your location is the reason your business is underperforming. Has it always been an issue or has something changed recently which has caused a drop in sales? If you have noticed a drop in sales after a change near the location of your store, renovations for example, then you may be able to access assistance from the owner of the centre you are in.

If you believe your location has been causing problems for your business from day one then you still have options to try and turn things around. The first step is to get in touch with your landlord or the owner of your centre. Making sure that tenant businesses are performing as well as possible is in their best interest and so they will want to work with you to get the best outcome all round.

If your rent is genuinely higher than your sales show you can afford, rather than risk losing you as a tenant altogether through relocation or closure, your landlord may be open to offering you a long term rental adjustment or finding you an alternative site within the centre.

It is always going to be better for the centre owner to accept less rent from an incumbent retailer than risk them going broke and having to try and sell the site on to a new unproven business.

Be prepared

Even before you talk to your franchisor or landlord for assistance you should make sure that you are doing everything you can to make the most of the location you are in. Are you exceeding benchmarks? Are you participating in centre marketing initiatives? If you are confident that you have done everything possible and still believe your location is letting you down then both your landlord and franchisor will be willing to work with you for a solution. Be prepared and be armed with plenty of information and data that supports your position. Just having an unsubstantiated whinge is not going to achieve a result, but landlords and franchisors do listen to well formulated arguments and appeals.

Vaughn McGuiness is director of Business Development Company; Phil Blain is franchise development principal