Franchise tenants do offer massive marketing profile and leasing potential to an investment property. If you are looking to boost the tenant mix and leasing of your property, then a well-known brand franchise tenant may be one of the best ways to go. A property that attracts any franchise tenant occupancy will most likely attract other tenants.
Most franchise tenants will be very selective in the properties that they look at and consider for occupancy. It directly follows that any top leasing executive will work with the leasing needs of franchise tenants; it is just a matter of understanding the property selection criteria and who to talk to with each of the franchise groups.
So what categories of franchises do you see today that you could influence into a lease of premises in your area? Try some of these as examples:
- Sports Goods and Equipment
- Health food retailers
- Gardening Services
- Office equipment
- Post office
- Fast Food
- Electrical goods
- Freight services
- Cleaning equipment
- Pool Equipment and Supplies, etc
So the list goes on, and you could very well add some categories to it. Importantly these are everyday business types that can well suit many of the investment properties that you lease during the year. Look at your existing tenant mix and decide what franchise tenants could be ideal for introduction to the property.
How do you get the ideas and find the business names and the right businesses to approach? Try these:
- Business telephone book
- Franchise Organisation websites
- Industry groups
- Competing properties
- Shopping Centres locally and regionally
- Drive down main roads and look at ‘signage’
- Other towns and cities
- Newspapers and trade publications
In preparation for knowing what your local franchise tenants and businesses could need, a direct contact program is required to get to the right people that make the property decisions. Cold call every franchise group you can identify to see what they are doing and needing by way of property and premises in your location; you won’t be the only agent doing that, however professionalism and understanding will help you with servicing these tenants.
Here are some of the bigger factors to explore with each tenant of this type:
- Location – What is the ideal location for the tenant and why is that so? There will be reasons why these tenants locate to certain towns, cities, or suburbs. Ask the questions to understand those factors.
- Customer profile – Certain tenants will require a particular type of customer that can spend money on the goods and services offered. On that basis they will want to improve their business over time; local population demographics and business growth will be questions that they consider. Check out the local business plans and expectations for the region with the ‘Chambers of Commerce’ or similar organisations.
- Property locations – There are differences in location to be understood. They will include transport, access to customers, exposure, proximity to competitors, and regional growth. Not all locations will suit all tenants.
- Lease terms and conditions – Many tenants of this type will want to use their own lease format given the special terms and conditions that those leases provide to their business. That is not a bad thing, but a full lease review on behalf of the landlord will be required before document acceptance and signature.
- Property improvements – Many properties will have improvements that require modification for the tenant. If that is to occur then the ‘make good’ clauses or requirements of the lease should be adjusted accordingly. Don’t leave the landlord with the problem of tenant fit out configuration without a reasonable monetary offset.
- Branding and signage – Most tenants of this type will require extensive branding capability and signage that matches their national identity and existing marketing profile. The landlord for the property will need to adjust to the ‘branding’ needs of the tenant; or at the very least provide some signage flexibility to bring the ‘franchise brand’ into the property. The way to control the signage and marketing material will be through the lease documentation.
- Permitted use and or exclusivity – This is always a big question and issue when it comes to leasing of vacant space in an investment property. Some tenants will request exclusivity. Whether the landlord wants to agree to that should be considered separately based on the merits of the case and the tenant profile. In a larger property with lots of tenants across the mix it is quite likely that ‘exclusivity’ is a negative thing.
So there are lots of things to consider and understand when it comes to putting a franchise tenant into a quality investment property. As the leasing expert you can guide the landlord through the ‘pros and cons’ of the process. Choose a top class franchise tenant on landlord favourable lease terms; the property and the tenant mix will benefit.