Insights into the localisation of outlets: The franchising chains

Abstract

The geographical location of an establishment is a strategic decision of major importance for companies. In the case of franchising, the peculiarities of the system render this decision of vital importance. The objectives of this work are threefold: a) to identify hotspots of franchise establishments; b) to perform an analysis of the distance between establishments; and c) to specify a weighted geographical regression model to estimate the influence of income, population density, and percentage of commercial area of the municipalities on the number of establishments of the franchises located in the chosen municipalities. To this end, 1,508 establishments belonging to seven franchising chains operating in Spain have been selected. The results show that there is an agglomeration of establishments in various geographical areas. Geographically weighted regression also confirms that the variables analysed constitute good predictors of the number of establishments in each municipality.