Franchise Tenants are a Big Leasing Opportunity for Commercial Real Estate Agents
When you work in commercial and retail real estate agency you will soon see the value of working with franchise tenants from a leasing perspective. These successful franchise groups need good properties that satisfy their occupancy requirements and business plan.
Franchise tenants are a proven business type and model. They have an ideal demographic that they serve and grow from. Your job is to find their ideal demographic in your property market.
It should be said that every franchise group will have particular needs when it comes to property choice and selection, so asking the right questions will help you with that knowledge. If you provide the right service and property selection opportunities to these groups you can build a solid channel of leasing income.
Here are some questions to ask of your prospective tenants looking for a new franchise location and premises.
- What is the ideal property type? From that information you will know about location and property size. If the tenant has competition locally from other similar tenants and groups, check out those properties as part of the market and property investigation.
- What are the terms of lease that will fit into their business agreement? The lease has to match the franchise agreement, so any landlord that you work with will need to be ‘leasing flexible’.
- What signage and branding material will be required as part of lease occupancy? Consistent branding is part of the success of a franchise tenant. Whilst the signage will need the approval of the landlord, the placement and size should be considered. If the tenant is well known in the community they are likely to be a ‘drawcard’ for the property and the other tenants in the mix.
- What special equipment and fit out will be required in the premises? A complex fit out will have to be made good at the end of the lease term. That make good should be at the cost of the tenant unless the initial lease term is very long and the landlord considers that the long term benefit of the lease offsets the make good cost at end of lease.
- Some franchise tenants ask for ‘exclusivity’ of use. Be careful in giving such rights. In a large property it can be a real hurdle from the perspective of tenant mix flexibility. A good case in point would be in giving a retail shopping centre tenant exclusivity to ‘sell coffee’.
To be successful in working with this category of tenant, you simply need to ask all the questions and be wise in your lease document choices.
