You know what they say – location, location, location! When it comes to franchises, this real estate agents’ mantra rings true. The location of your franchise can make or break it. That’s why it’s essential you select exactly the right spot for your franchise’s particular needs. No easy task, particularly if you’re a first-time franchisee. To make it easier, follow these three steps…
Step One: What Are the Franchisor’s Requirements?
Some franchisors are very involved in sourcing locations and provide detailed descriptions of the type of location in which they require franchises to be situated. They may include factors like population density, site visibility, square metreage or tenant mix. For example, a fast food franchise might specify that a franchise must be situated in areas of high levels of foot traffic, near to a public transport system, or a beauty franchise might require franchises to be in a shopping mall, close to clothing retail outlets.Some franchisors may send experts to source a location for you, and simply have you tag along, whilst others may expect you to do the legwork – based on the descriptions they provide – and sign off the identified location once they’ve checked it out.
If your franchisor doesn’t provide this level of involvement, at least on a formal level, have an informal chat with them to garner their suggestions and speak to other franchisees to access their experiences. Also get yourself a trusty, reliable commercial real-estate agent who has an intimate knowledge of the area to help you.
Step Two: Survey the Area
So you’ve identified a great spot, but before you put pen to paper and sign a lease, do conduct a thorough analysis of the area, paying particular attention to:
- Your franchise type – is it a destination franchise (people seek you out) or an impulse-buy type of franchise (where visibility it very important)?
- Demographics – do they match that of your franchise business?
- Centre management or the building landlord – are they committed to helping businesses thrive, how often do they increase rent and what are the experiences of other tenants?
- Traffic – is the area busy and it is it easy to access by vehicle?
- Foot traffic – are there plenty of people walking by the doors of your potential location?
- Parking – is there plenty of secure parking for customers?
- Security – is the area safe for patrons and staff alike?
- Neighbouring businesses – do they complement your franchise business?
- Future developments – check with the local municipality to see what is planned for the area which may impact on your business (like a rival shopping centre which may kill business or a taxi rank which may boost business).
Step Three: Get an Attorney to Look Over the Lease
Once you’ve negotiated the best possible deal with your landlord, get a property attorney to look over the lease agreement handed to you. As any good attorney will tell you, contracts favour the person who drafted them and are always negotiable. Don’t be afraid to let him or her make amendments where necessary – you’re employing their services so that you don’t the raw end of the deal! Make sure you familiarise yourself with the ins and outs of your lease, particularly clauses relating to the responsibilities and duties of the landlord and the tenant and any circumstances which would constitute a Breach of Contract.
BONUS TIP: Suss Out Your Franchisor’s Future Plans
Ask your franchisor whether there are plans to sell further franchises within your given area. Check your franchise agreement – does your franchisor guarantee you an exclusive territory, i.e. territorial protection by not allowing other franchisees to operate in a given area? If they don’t guarantee exclusive territories, taking the time and getting the right kind of help to hunt down a red-hot location is even more important!