Let’s say that you just signed your franchise contract, and you’re ready to get your new retail franchise or food franchise up and running. You’ve put hundreds of miles on your car doing some preliminary checking for that perfect franchise location…and you have a few places in mind. Now what?
Location, Location…
You’ve heard (somewhere) how important “location, location, location” is for your franchise business to succeed.
Of course, you’ve also heard* things like, “Franchises are turn-key businesses; all you have to do is ‘turn the key’ to the door of your franchise business every morning.”
Only one of the two statements above is true. It’s the one about your location.
If you’re going to become the owner of a franchise that requires a commercial space, like a retail franchise or a food franchise, the location you choose is crucial. Your success (or failure) really rides on it.
It’s a good thing that a lot of franchisors have access to commercial real estate professionals in your area…or they will soon after you sign your franchise contract.
The Franchisors Role in Securing a Location
The franchisor, in most cases, will help you find a location for your new business, and may even assist you with lease negotiations. The franchisor has probably been through this several times, so they know what you should be looking for in a lease, and should be able to help you with some fine-tuning.
Commercial leases are seriously complicated documents. The franchise attorney you used to look over the FDD may be able to assist you with your lease. A lot of lease terms are negotiable, but you have to know which ones. That’s one reason to have a competent attorney by your side.
From Open Forum by American Express*:
“On the surface, it may not seem that renting office space offers a lot of room for negotiation. You look for rentals in your price range, tour the property with the landlord or manager, and sign a lease for the amount advertised.”
The writer goes on to say:
“The truth, though, is that even if you’re talking to a management company that can’t negotiate on price, there are many opportunities to make your lease a more equitable contract. From exactly what expenses your rent covers to how far the landlord will go to prepare the unit for you, you have an opportunity to negotiate each step of the lease.”
Who Decides
The franchisor makes store location recommendations based on things like vehicle traffic, foot traffic in the area and demographics. They have access to reports that help them decide if the location you’re choosing, or the one they’ve suggested, has the potential to be a good one.
In almost every case, both parties must agree on the choice of location. For example, if the franchisor doesn’t think that the location you have in mind will be a good one, they’ll tell you. On the flipside, if the location they have in mind for your new franchise doesn’t feel right, you can object to it.
Sometimes, it comes down to cost; I’ve had clients turn down locations suggested by the franchisor because the rent was, in their opinion, “too high.” In that case, my clients went back to the drawing board and came up with alternative locations. It can be a real back-and-forth process between franchisee and franchisor, but one that’s necessary.
Because at the end of the day, both parties want to make sure that the location will be a successful one. The process to find a great franchise location may take a bit longer that you anticipated, but it’s worth it.
Work closely with your franchisor; they really do want you to win.
* Non US Government links
(I’m The Franchise King®, Joel Libava. I’m the author of “Become a Franchise Owner!” I teach people the smart way to choose, research and buy a franchise. I originally wrote this article for The U.S. Small Business Administration. https://www.sba.gov/blogs/finding-location-your-franchise-business. Used with permission.)