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Finding a franchise location

Written by: Diarmuid Kieran

Article Overview: How to find a good location for a franchise business.

Finding a franchise location

To run a successful franchise, franchisees need to operate from a location that is affordable, spacious enough and in many cases in an area where a large number of people go every day.

Good franchises will provide detailed selection criteria with information covering subjects such as the population of the surrounding area and the age and gender makeup if necessary, how many people visit an a town or city centre or shopping area and the amount of parking available.

With franchises that do not require face-to-face sales in a building, such as accountancy, internet and merchandising franchises, and also home maintenance and services franchises, an office or warehouse is often the best place to work from.

However, others need to sell products to customers either mainly or solely face-to-face, therefore they need to assess the places in their region where are lot of people visit or go past.

Large shopping centres or malls are certainly a place where there is a high amount of foot traffic and can present franchisees with an excellent location. It is likely though that extra charges such as area maintenance, association dues and advertising will have to be paid.

Other options are city or town centre shopping areas or neighbourhood shopping complexes in suburb areas which usually contain a supermarket and a few other large retailers.

These can vary in quality and the number of people who visit them so it is important to do extensive market research and obtain, if possible, figures detailing the number of people who shop in these areas.

Wherever the retail location, franchisees need to bear in mind where the retail spaces available are in relation to competitors and what its neighbouring stores are as most of them may attract and different target audience to what the franchisee is looking to get.

Once a possible location has been found, most franchisers will want to approve it and as well as how many people could potentially visit it and its cost, the franchiser will take into account the size of the building.

This is because there needs to be enough room for all the equipment and other stock, with ideally room left over if the business is successful and needs more staff and equipment.

The one potential obstacle left if the franchiser approves the building is the lease negotiation, which should involve a real estate broker.

Along with the franchiser and broker, franchisees need to ensure the rent and other costs such as real estate taxes and landlord insurance are reasonable.

In addition, franchisees need to ask if there is any financial aid available from the landlord in the form of free rent allowances and tenant improvement allowances.

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