A Handy Checklist Approach for Leasing Properties to Franchise Businesses

city buildings on river

There are plenty of commercial real estate opportunities in targeting franchise businesses from a leasing perspective.  The facts of the matter are that a franchise type business will in many cases want a property to operate from; they have special property needs to suit business models. (NB – you can get our leasing tips and ideas in ‘Snapshot’ right here)

You can be the person to help with that providing leasing updates, lists of vacant premises, and rental assessments for a location.

Many brokers and agents work with specific franchise groups where they get to know:

  • The business model
  • Property choices
  • Rental capabilities, and
  • Lease conditions

If this is the segment of the market for you given your leasing focus, then the best approach is to work with a checklist; that is something to refine your activities and leasing questions into the franchise tenant type and business model.

Leasing Checklist

Here are some ideas to help with that:

  1. Location – The business may need to be located into a zone or precinct of your city where they have potential customers, marketing exposure, or competitive position. They are likely to have priorities on that basis when it comes to property selection.  The key issue here is getting to the core facts of what they need on a location basis.   You know your city better than most people; that’s your ‘game’ or ‘business’ in commercial real estate so you can refine the best parts of your city that would match various franchise business models.  Street by street, building by building, there will be locations that are well matched to the retail requirement of retail franchise businesses.  Think about exposure and customer base.
  2. Property configuration – The business may need a ground floor or retail exposure. That will dictate retail rents for most buildings.  What are those rents currently in the property market and for the location?  How can you negotiate with those numbers based on the landlords current leasing requirements for the building?  Get your facts sorted before you negotiate the lease.
  3. Marketing or branding – The property must support the marketing requirements of the franchise business. Where will the signs go?  How big will those signs be?  Can you get some extra rental for the placement of those signs?  These are valuable questions to consider from a landlord perspective as you negotiate the lease.
  4. Lease requirements – Most businesses of this type will require a lease term and some occupancy flexibility that matches into the franchise model or business agreement. Those factors could be time and marketing related; the license length for the business should be understood and the lease negotiated with the landlord on that basis.  The landlord should be somewhat flexible in working the leases and the negotiations around that.
  5. Merchandise or product offering, and competitor locations – Many businesses of this type will be aware of the location of their competitors and how that will impact future trade. You may also find value in researching local franchise brands and the locations of each business.  Look at the various merchandise groups for the retail or food segments. Do a SWOT analysis of each, so you can identify the things that seem to be working locally in helping the segment or the franchise brands build business and sales.

A simple checklist like this will help you refine your leasing strategies and negotiation factors with franchise type tenants.  Understand the segments and the ‘players’ in your town or city.  As you work with the different businesses, get closer to their lease requirements.  When a good site comes up for lease, you can immediately quote it to the right people in the location.

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