We’ve all heard the saying “location, location, location,” and whether you’re looking to purchase your first franchise or expanding to new markets, the right location is a critical component for success. If you’re new to the franchise world, figuring out the location for your business may be easier said than done. You may have a couple of ideas in mind, or you may have been spinning your wheels — quite literally — looking for that elusive perfect spot.
Well, save the miles on your car by following these recommended best practices for navigating through the site selection process.
Based on current client data, franchisors should know the exact client profile and site attributes that you’re seeking. The franchisor helps drive this process; but, in the end, the franchisee often plays the most pivotal role throughout the site selection process.
Make sure you’re engaging the proper resources.
There are four primary resources that I’ve found need to be involved in the site selection process: the data, the franchise owner, the franchisor and the local real estate broker.
As the franchise owner, you’ve gained valuable information from living and doing business in that market, from understanding the demographics to having knowledge of various neighborhoods — and you write the check, so it’s ultimately up to you to be comfortable with the decision. The franchisor has great brand knowledge to drive the process. And finally, your real estate broker needs to be able to share what’s going on with retail sites locally, what’s becoming available in off-market deals, any new developments coming up and their advice on rent offers based on the local market rate.
Understand your options and priorities first, then start looking at the deals.
The franchisor and broker should work with you to set your market strategy tour first, then start unpacking the available real estate. If you jump right into looking at what’s available without doing your due diligence, you might get sucked into the trap of taking whatever is available at that moment. Ultimately, it might be more beneficial to be a little more patient in the market and get the right real estate.
You also don’t generally want to select a site solely based on the right location; you also want the right price and terms. Independently, you can research asking rents on sites like LoopNet, Cityfeet or CoStar or speak with other business owners in the areas you’re considering and get an idea of rental rates and other terms. For professional guidance, you can consult a real estate broker to find out what the right price is based on their local expertise. When you’re negotiating on the terms with the landlord, you can conserve working capital by pushing hard on your tenant improvement allowance, as well as the work letter you’re going to pursue. The work letter includes what you’re going to ask the landlord to do.
Read the full article published in Forbes by Chief Development Officer, Matthew Stanton by clicking here.