Six Basic Tips for Selecting Your Franchise Location

Six Basic Tips for Selecting Your Franchise LocationSo, you've selected the opportunity on which you wish to build your future in franchising. Now comes an equally momentous decision: where to locate. If your franchise will be a site-based business, there is no way to underestimate the importance of this decision.
One the most important factors in the success of any franchise operation requiring commercial space is its location.

Even if you are operating the greatest franchise concept in the world, managing it impeccably and being supported wholeheartedly by your franchisor, the wrong location can doom your business to failure. The right one, all things being equal, can lead to success. Here are six basic tips to help you make the right choice for your site-based franchise business:
  • Have the right selection team.
  • Be where your customers are.
  • Be accessible to prospective employees.
  • Make sure the building itself meets your needs.
  • Get the economics right.
  • Get good legal advice.


Have the right selection team.

Though you will make the final decision, gather a team to help you through the process: your franchisor, a local commercial real estate broker and a leasing attorney.

Be where your customers are.

If you are not where your customers are when they need you, you will not meet their needs. Especially if you operate a retail or food franchise, the following location factors are essential to your success:
  • Availability: Pick a location where customers are likely to be when they want to do business with you. In the case of a mall or shopping center, be sure the hours suit their hours.
  • Accessibility: Traffic patterns, both vehicular and pedestrian, should make it easy for customers to reach you. The traffic flow should ideally lead them to you. Once there, they should have access to convenient, adequate parking.
  • Visibility: You should be clearly visible when customers are looking for you ? from the road or highway if you are choosing a freestanding location or in a prominent place in a mall or shopping center.
  • Demographics: Pick a location frequented by the type of customers
    you want to do business with in terms of age, income and hours. For example, if you cater to office workers during lunch, be near corporate office buildings.
  • Community: Pick a prosperous or up-and-coming neighborhood, not one in decline.

If you are operating an upscale retail franchise, choose a mall or shopping center with other upscale retailers. If your franchise depends on foot traffic, select a well-traveled mall. Avoid locations where there are already businesses similar to yours.

Be accessible to prospective employees.

So as not to limit your employee pool, besides offering easy access by car, be sure the location is convenient to public transportation during your hours of operation.

Make sure the building itself meets your needs.

Are the size and layout adequate for your type of business? Is the building in good operating condition? If not, you may incur substantial costs for remodeling or expansion. Get your franchisor's advice on this one.

Get the economics right.

Perhaps the most important factor is your rent. Even if it seems to be set, realize that, with the help of your franchisor and your real estate broker, almost everything else is negotiable, some of which may be included in the rent, such as:
  • Percentage rent clauses that cause your rent to go up as your business grows.
  • Common area maintenance, real estate taxes, landlord insurance and other
    expenses.
  • Costs to renovate or get the property ready for your use. Some landlords will throw this in to seal the deal.

In addition, you will probably need financial assistance. Your franchisor and broker should help you with finding this. Often the landlord will provide financial assistance in the form of free rent allowances and tenant improvement allowances.

Get good legal advice.

Commercial leases are complex documents. Hire an attorney who specializes in commercial leasing to review your lease contract. Your franchisor may have a proposed lease document that you can use instead of the landlord's common lease. At the very least, your franchisor will provide sample lease contract language for ?use" clauses and restrictions on allowing competing businesses in the same center.

One caveat.

If you select a mall location, know that mall operators are as important to your business as your franchisor. Incompetent mall management can ruin your investment. So before agreeing to a mall location, ask other tenants what it's like to do business there.

One more tip.

Your franchisor will recommend locations he feels most likely to be successful. Listen, but don't choose a location you're not comfortable with, especially the cost. Do your own research and work with your franchisor to come up with an arrangement that pleases you both.

What next?

Real estate shopping can be exciting. But don't rush. Take time to reflect. Explore your options. Eventually you will find the right location. When you do, you will have made one more giant step toward fulfilling your dream of business ownership. Ready to get started? Explore top franchise opportunities.