Franchise Location – Your Place or Mine?

We’ve talked about the advantages of buying a franchise, and what it takes to set one up successfully. Let us now focus on an extremely important issue related to franchising – finding the right franchise location. What does it take to zero in on the ideal site? A quick look at this piece can be a good starting point.

The decision to award a franchise is highly influenced by territorial considerations. Very often, the franchiser will seek partners in specific locations, where their business might be unrepresented. So, when you sign up as a franchisee, you will have to work within a geographical boundary. In the happy event that you already own premises that are suitable for the new venture in the designated territory, cross out item number one on your to-do list. For the rest of us, scouting for a suitable franchise location is inevitable.

The space issue is a big deal with franchisers, so be prepared to let them have their say. This is only to your advantage, as they will speak from prior experience, and therefore, have a better judgment of the viability of a particular space. Franchisers will specify a few things – among them, size, layout, and the quality of the immediate neighborhood. There will be other considerations as well – such as approachability, availability of public transport or parking space, and visibility of signage. All these are very valid considerations, so think twice before you dismiss any. In addition, the franchiser may insist on a personal visit by their representative in order to reassure themselves regarding the appropriateness of the franchise location.

So, the place is identified. Bravo! But don’t pop the champagne yet – its time to get into the nitty-gritty of the lease documentation. If you’ve roped in the services of a real estate brokerage company, they will be able to guide you on the legal aspects of structuring the lease agreement. Alternatively, seek the help of a lease attorney. The franchiser is not likely to be left behind, and may have a thing or two to say about must and must not have clauses. Then there’s the landlord himself – if he is in a position of strength, chances are, you will have to accept the documentation the way he likes it.

That being said, most lease agreements will go by standard clauses – see for yourself at From your point of view, watch out for the commercial terms – is the rental per square meter reasonable for that neighborhood and the condition of the premises? What is the stipulated escalation and when does it kick in? Another thing to consider while finalizing the paperwork for the franchise location is the term of the agreement and whether it comes with a lock-in period. A longer term saves you the bother of relocating frequently, but invariably specifies a minimum duration of occupation. This could be a good or bad thing, depending on how things pan out, but you don’t have the luxury of foresight when you make that call.

In case you have several options of space to choose from, go for a place that is the most commercial in character – by that we mean one that is located on the high street, or in the central business district of your city. Choosing to house your operations in a building constructed by a well known developer will offer the added advantages of well kept surroundings and a support system to handle any repair and maintenance issues.

Remember, the decision of choosing a franchise location is extremely crucial. Do it with care.

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