Ready, Set, Open!

So, you’ve been approved as a franchisee? Congratulations! The next hurdles on your journey to becoming a successful franchisee often involve finding suitable premises. The importance of this part of the process can sometimes be overlooked, writes property leasing expert Marcus Bosch.

Finding premises and getting them open for business can be more complicated than you think. Here’s a handy nine-step checklist to follow.

1. Understand your franchisor requirements

Good franchisors will have:

• Location, premises and fitout guidelines and requirements for you to follow
• Rental ranges and fitout cost ranges

Visiting franchise stores in neighbouring territories will give you a feel for what makes an ideal location.

2. Define your premises brief

Based on your franchisor requirements and your site visits, summarise your requirements into a single one-page premises brief that can be circulated to real estate agents, property managers and third parties.

Your brief should include:

1. Overview of the franchise business – demonstrating you are a low-risk operator
2. The territory you need to operate within
3. Ideal location criteria – eg. target demographics, locality (shopping centre, high street etc), nearby attractions, competitor proximity, visibility, access, zoning
4. Ideal premises criteria – eg. size, layout, condition, business specific needs such as ventilation, rubbish, storage, delivery access
5. Ideal infrastructure criteria – e.g. power / gas / water / waste / communications requirements

3. Market scan to identify available and potentially available premises

Think of the pool of premises available as an iceberg; the available premises are above the waterline. The premises that could become available are below the waterline.

Ideally, you want to scan for premises above and below the waterline. This involves scanning for premises available for lease on public websites, then diving below the waterline by talking to agents, property managers, developers, accountants, solicitors and more to identify premises coming to market.  

At the end of the market scan, you should have a list of available premises to consider.

4. Qualify and shortlist potential premises

Qualify your long list of available premises against your premises brief and wider franchisor requirements. Rank them in order of preference. Shortlist three qualified premises.

Next, do your market research, cost estimate and lease negotiation. If time is tight, you may wish to do this on your top two shortlisted premises.  

5. Do your market research

Before you commence any lease negotiations, it’s important to understand what the market lease terms are, so you have a baseline from which to negotiate a better deal. Consider: What are the rental rates? What are the incentives? What terms are on offer? How motivated are the landlords?

If you are working with a real estate agent, you need to remember that they are incentivised to maximise the asking rent and expedite the leasing process, as they are working for the landlord, not you.

6. Think in terms of lease lifecycle: Entry, Occupation, Exit 

Your lease is your second largest business cost. Before you commence lease negotiations, take time to calculate likely costs and risks of:

 

7. Negotiate the lease

Negotiating a lease deal can be broken down into several steps: ...

 

This article is published in full on page 46 of the Spring issue of Franchise New Zealand magazine. Request a free print copy or access our free digital magazine to read the entire article.

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