McDonald's, Starbucks and Subway do not guess where to open. They run detailed trade area analyses, demographic modelling and competitive mapping before committing to any site. Here is what they look at — and how you can replicate it.
What franchise location teams actually analyse
A major franchise's location team typically analyses five categories: trade area demographics (who lives within driveable distance), traffic counts (both vehicle and pedestrian), competitive landscape (how many similar brands and how well-traded they appear), rent-to-revenue modelling (does the projected trade support the lease cost), and cannibalism risk (would this new site pull customers from an existing company location).
The trade area model
Franchise brands define primary (80% of customers), secondary (15%) and tertiary (5%) trade areas. For a fast-food restaurant, the primary trade area is typically 1–2km. For a gym, it is 3–5km. They use census data to understand the demographic profile of each trade area and apply historical data from comparable existing locations to project revenue.
The franchise location checklist adapted for independents
1. Define your primary trade area radius (based on your business type) 2. Profile the population within it using ABS data 3. Map all competitors within 1.5x your trade area 4. Model your revenue projection based on comparable data 5. Calculate rent as a % of projected revenue 6. Assess the risk/return against alternatives
Traffic counts: what franchises measure
Major brands pay for vehicle traffic count data from traffic authorities and pedestrian count data from council infrastructure records. They correlate traffic volume with observed trading levels at comparable sites to estimate revenue potential. Independents can approximate this with manual counts and publicly available ABS journey-to-work data.
Why franchises sometimes get it wrong
Even well-resourced franchise systems make location mistakes. Methodologies optimised for national chains do not always translate to independent operators with different customer profiles and business models. The key lesson is not to copy the franchise methodology but to understand the principles — and apply them to your specific concept.
The independent advantage: agility
Independent operators can act faster and are not constrained by corporate brand standards. This means they can take locations that a franchise cannot — laneways, small format premises, emerging suburbs before rent rises. The location science helps you understand whether these non-obvious locations have the underlying demand to work.
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