Tips to find the best location for your franchise


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great location

The rules of each franchise will govern the detail of finding a location for a new outlet. It is typically the responsibility of the franchisee to find a location that closely matches the conditions laid out by the franchisor, but if you want to find the best location there are a few rules you can follow..

The right location is key to success in franchising – indeed, it is usually the dealmaker in getting a franchise in the first place. Franchisors (such as McDonalds) can be extremely exacting in their requirements. In addition, the degree to which they’re willing to help find a suitable site and negotiate the lease varies tremendously.

Understand the franchise business

Understand the franchise businessThe many different types of franchises clearly affect the choice of location. You should first consider the type of business and what would drive customers there. It’s best to discuss with the franchisor how the business functions so as to understand what type of space you need. A restaurant would need a quite different space and size compared to a beauty franchise. It would for instance need to be situated in a place with a lot of foot traffic and easy access for people travelling in cars as well as people possibly using public transportation.

 

 

 

Find out the franchisor’s requirements

RequirementsOnce you understand the business model, one of the first things you should be asking is, how do you determine what type of location and premises are required and what support is there to get you in. Only the franchisor can answer this. The franchisor is the one who defines the:

 

 

  • type of location,
  • size of location,
  • neighbourhood,
  • the traffic conditions and
  • the cost spectrum.

The franchisor may commonly work with a commercial real estate broker to help aspiring franchisees find the best location in their particular geographic region.

You should talk to other successful franchisees to find out how they went about finding a location for their business. Get as much information from them as you can and try to emulate their successful methodology.

Carefully evaluate the site

EvaluateThe location’s specifications will largely be dependent on the type of business, but more than half of today’s franchises are retail businesses, so in most cases we’re looking at a retail site.

 

 

 

 

  • Unless your ideal location is in a shopping centre or mall, study the street traffic patterns for ease of access. Are you on a desirable side of the street with adequate parking at your site? There can be variations during the day, so visit the site multiple times during the day.
  • Study the location’s demographics and even future building plans. Local contractors can be great sources of information
  • Research neighbours of the proposed site
  • Find out where are your nearest competitors and whether your position is superior
  • If it is in a shopping mall, check out the tenant mix in the mall or nearby area
  • Be aware of industry specific factors – for instance, if you have a child care franchise you won’t want a liquor store as a neighbour
  • If possible, try find a location with businesses that are complementary to your product or service. Some stores perform well when clustered with competitors due to comparative shopping behavior, for example shoe stores.
  • Look out for an anchor store that drives in consumers, such as a major retail store like a Pick ‘n Pay and Dis-Chem– but don’t be dependent on it
  • It has to be financially realistic, the business must be able to afford the monthly rent

Sweat the lease details

leaseNegotiating the lease is an area you would want and expect some help from the franchisor. They have more muscle. Just as you obtain legal advice on your Franchise Agreement, do so too for the lease agreement, with particular reference to ensuring the lease fulfills franchise agreements as to space configuration, signage and other factors. Leases can have hidden costs you’re not primed to look for, such as common area maintenance costs or turnover clauses.

Franchisors can help with these, but also use their muscle to find hidden concessions, by getting a landlord to fund a portion of the refurbishment on the property in exchange for a specific lease period.

Whatever help you get from the franchisor, always do your own due diligence. Remember, the business and all its obligations remain yours.