9 Ways to Find the Best Location for Your Franchise
Location. Location. Location. When building your own franchise unit, there are a lot of factors that play a role in a successful franchise, but location is probably one of the most important ones.
Here 9 ways to find the best location for your franchise:
Don’t be afraid to ask for help.
Not all franchisors will include help with location as part of their franchise program, but most will. As part of your franchise agreement, you most likely will get rights to a particular geographic region and you will have to choose a location within those boundaries. Your best bet is to join the team of an experienced franchisor who has already done a lot of analysis on what environments work best for this particular business. They will also already have established relationships with real estate brokers which will help make this whole process a lot easier for you.
Focus on these 3 important factors.
Type of location, size of location and surrounding environment can all play a role in the success of your franchise. Your franchisor might set some parameters with these so definitely get clarity on that. Some types of franchises thrive in a strip mall location while others do better in the middle of the hustle and bustle of a downtown area.
Size of the location matters as well. You will want to make sure that if your franchise is a restaurant that you have a big enough kitchen to handle a lot business and that the dining room is a comfortable space as well.
You should also consider how much traffic surrounds your franchise unit. You don’t want to be tucked away in a too quiet space that no one can find you, but on the flip side you also don’t want there to be so much traffic that it seeps into the store distracting your customers. Pay attention to the surrounding parking available as well. Do you have your own lot or do you have to rely on street parking for your customers? Do the street spots fill up quickly? All this can affect how much traffic you get in your franchise.
Research future development in the area.
Doing a once over of the neighborhood you are hoping to settle in isn’t enough to protect your interests. Future development in the area can also really put a wrench in your plans. What if a similar business is also in the works in the nearby area? This could draw business away from you causing your franchise to founder. The best way to get this information is to make friends with local contractors and the staff at the land use office of the municipality where you plan to set up shop.
Get to know the demographics of your potential customers.
Nothing is worse than opening up a store in an area who has no interest in your services. If you are a fitness chain then setting up in an area with a lot of senior citizens might spell slow business unless they are a group who like to stay physically fit. If you have a lot of Orthodox Jews in the neighborhood and you sell food then having Kosher products will be important.
Understand the lease details inside and out.
Even if the franchisor handles a lot of the lease negotiations for you, it is important for you to be a part of the process and to have a clear understanding of all the elements of the agreement. You don’t want hidden charges to hit you later. For instance sometimes signage on the property is an extra cost or there are heavy common area maintenance fees. Also avoid leasing agreements that require you to pay rent based on your venue. Called “percentage rents,” this allows the owner to jack up prices when you are doing well which will hurt your bottom line.
Regardless if the franchisor is heavily involved in negotiations or not, it is a good idea to have your own legal counsel review all documents as well and to make sure you are doing your own investigation as well to make sure everyone is being upfront and honest about all aspects of the lease agreement.
Financial support is available.
Often times, landlords do offer financial assistance to their leases in the form of free rent allowance or tenant improvement allowance. Don’t be afraid to ask about it because every little bit helps.
Language is important.
When it comes to legal agreements, the language used can really make a difference so it is important to understand the nuance of everything laid out in the lease. This is why having your own lawyer is a good idea. He or she can help decode the hidden meaning in some of the lease terminology so you are not blindsided later.
Make sure you follow all the franchisor’s instructions.
Many times your franchisor will ask you to use certain language in the lease agreement or to avoid certain wording. They may even have a document template that they prefer you to use. So make sure you have a clear understanding of what is expected of you when it comes to the lease agreement.
Don’t feel forced into any agreement.
With franchisors and potential landlords laying down all these rules and expectations it can start to feel overwhelming, like you don’t really have a say. But at the end of the day, this is your franchise so you need to maintain the reins. If you don’t like what they are saying get out before you sign anything. You might just need to do some more looking around before you find the right situation for your store.
Throughout this whole experience, feel free to reach out to other franchisees. Ask them about their experiences with negotiating a lease and picking out a location. They can also give you insight on if the franchisor is actually as supportive through the whole process as they say they will be. Any tips you can learn from their challenges will help guide you in making the right decision.
If your franchisor is more hands-off when it comes to their franchisees and doesn’t really offer you a lot of support consider hiring a franchise consultant to give you the support and guidance you need. Call MBB Management today to learn more.