Location, location, location. As with any business when it comes to successfully running a single franchise or multiple franchises, location is a critical factor for success. It can make you or break you. So how can you find the perfect franchise location? Be sure to check out the following tips and tricks.
1. Know Thy Franchise.
In order to effectively choose your location you need to know your franchise concept inside and out. Who are your target customers? Where do they live? What drives traffic to the business? Do you need a highly visible location because you rely primarily on impulse sales? Are your customers coming to you or are you going to them? Remember, there is no universally “good” location; choosing an appropriate location is contingent upon the needs of your business. The perfect spot for one franchise might fail to meet even the most basic of needs of another.
2. Rent vs Traffic Flow (Rent vs Profit).
When it comes time to evaluate the actual rent you are going to pay at different locations, you really have to consider what you are going to get in return for your money in terms of customer volume, visibility, and profits. Sure, you can save a lot of money by renting a space out of the way or where the traffic flow is less. But what if you went a little on the high side with the location with the highest traffic flow? Chances are the higher priced rent will lead to more awareness, more customers, and larger profits. Never underestimate the benefit of visibility and traffic volume. Virtually every franchise business I know that opted to “go big” and risk it with higher rents and higher volumes were successful in their strategies. And most businesses that went with lower volume locations either struggled or saw much lower revenues. To evaluate demographics and site selection, consult services like Demographics Now orBuxton.
3. What Happened to the Previous Tenant.
In the case of existing infrastructure, it’s a good idea to check and see what business was in your space before. If it was a similar business, then it may be time to consider a new location. Or at least consider why they failed. You don’t want to make the same mistake as the last guy. How many times have you seen restaurants fail in the same spot year after year? Sometimes a business can fail due to infrastructure issues. Maybe the site has problems with plumbing, bugs or rodents, bad tenants next door. Be sure to consider if any of those factors might affect you too.
Let’s face it, parking is always an issue, and most times a headache. So the question is… does the location have adequate parking? And, are there other tenants that might be hijacking all your spots? A perfect example of this parking lot hijacking phenomenon exists right here in Austin. There is a very popular quick service taco stand here that completely congests the parking lots at all their locations. So much so that that other vendors have no spots whatsoever despite signs such as “This spot reserved for Ace Cleaners” or “No Taco Parking in These Spots.” If your lot does have issues, do customers have access to convenient parking nearby? Considering overflow street parking is always an option and good idea. If parking is a problem, customers might just go elsewhere for your products and services.
5. Street Access.
The ease in which people can actually reach your franchise is another huge factor that can be easily overlooked. If your customers cannot easily access your locations both ways in traffic, you might be limiting your success. For example, some streets have large medians or stop lights that may prevent entry into your facility. So be mindful of traffic flow and any obstacles.
Signage is always a big deal so be sure that your franchise location has clearly visible signage from the street. Be sure that there are no bushy trees or buildings obstructing the view of your signage from primary traffic arteries.
7. Other Tenants.
What about other tenants in the same strip mall or general area? Are the other tenants nearby respectable and in-line with your brand or clientele? Or will they interfere or contaminate your franchise’s brand or image? Don’t just assume that a site would make a good location. Do some analysis. Remember, in typical suburban and urban shopping centers you will likely be sharing space with other tenants so it is important you understand who these other tenants are and how they will (or will not) affect your business. Depending on your demographics, it can sometimes be beneficial to position your business near a major store, such as major department store, Starbucks, or a grocery store, as this can help to attract traffic and drive sales. However, you do want to be careful not place your franchise too close to a competitor.
8. Proximity to Your Other Locations.
If you already have one or more franchise locations open you may want to consider carefully the geo-position of your next location. Commonly, single-unit owners will try to “canvas” a city with their second location and place it quite a distance from their original location. They often do this in hopes of raising awareness of brand across the city. From my experience, this is generally a bad idea. Why? With locations spread all over town it makes it harder to take advantage of marketing campaigns, harder to deliver inventory to your stores, harder to fix things that break, harder to swap employees between stores, and more difficult to manage in general. If you are the owner operator, be prepared to rack up some serious miles on your car. A better approach is to pick the best location nearest your current location that doesn’t cannibalize sales. This will save you and your team tons of commute time, allow you to cross-staff employees, quickly hotshot inventory and fix repairs as well as greatly improve impact of marketing efforts.
9. Infrastructure and Landlord.
Be sure to check out the building very carefully as well as the landlord too. Consult with an independent building inspector so you get an honest assessment on the lease space. Talk with other tenants to see if there are any problems with the building or landlord. You can usually get a sense of the situation by talking to other existing tenants.
10. Consult With Your Attorney.
Before signing the lease and closing the deal, consult your attorney. Yes, you do want to sweat over the details of the lease. In fact, you want to sweat over each and every detail of the lease. A professional can keep an eye out for the details you simply just do not think of. For example, they can help to make sure that there are extensions on the lease and can also help to include provisions to lower your rent should a major tenant in the shopping center close or relocate. Be sure to have an exclusive clause to prevent a competitor from moving in next door too. Sometimes a franchisor can be a great asset in the lease negotiation process. Many franchisors will actually undertake lease negotiations themselves for franchisees. But just remember, it’s your name on the lease so be sure to have all your ducks in a row when it comes down to the final lease agreement.