Some franchisees or small business owners plan to open multiple units. If your goal is to be a multi-unit developer of a business, you’ll want to put together a market development plan or MDP. A MDP enables you to strategically look at a market and decide where you can locate each of your units to maximize profit and minimize cannibalization. Cannibalization in this context, means competing with yourself across two or more units for the same sales. Take a look at the diagram below:
This graphic shows three possible areas that fit model criteria. The radii in the above diagram represent each location’s (A, B, and C) nominal trade area. If I develop location A, I cannot construct location B without cannibalizing location A. I can however, develop location C and location A without any significant cannibalization. I could also construct location C and location B with no cannibalization.