What These Franchisees Learned From Opening in A Bad Location

The most common, time-tested adage when considering what aspect makes a business profitable is something we've all heard by now: “location, location, location.” Location is a key assessor when measuring the successes and failures of a business, whether celebrating a grand opening or a 10-year anniversary.

It’s common for business owners to look at key factors like proximity to amenities, accessibility and growth potential when comparing real estate, but for locations that check all of those boxes, it’s still possible for influencers out of the owner’s control to impact valuation and customer quantity.

So what happens when a business owner opens its doors on what they thought was prime real estate only to find that the site is a bust? And how do you turn your struggling destination into a hot spot?

1851 Franchise connected with real estate expert with Baldwin Properties R.E. Dustin Queen, Signal 88 franchisee Joey Billiot and multi-unit Checkers* & Rally’s franchisee Bruce Keehn to talk about common mistakes business owners make when choosing their real estate and tips to overcome the challenges of opening up a franchise in a bad location.

Billiot opened his Signal 88 location in Lafayette, Louisiana in 2015, choosing to join the growing brand based on a recommendation he received from an army veteran he met while serving overseas in Afghanistan.

“I was working as a reserve police officer outside of Lafayette and a buddy of mine suggested that I look into franchising opportunities with Signal 88,” said Billot. “I reached out to the corporate team, found another family man who was also seeking a more flexible schedule, and the two of us quit our jobs to open a business together.”

At the time, the Lafayette economy was booming due to the large oil industry in the area. But with plunging gas prices and hundreds of thousands of layoffs nationwide, Billiot’s business took a hit.

“Much of our business with Signal 88 is reliant upon occupancy in the cities we serve,” said Billiot. “We chose Lafayette because it was close to home and we didn’t want to have to move our kids across the country. What we hadn’t considered was the impact a downturn in the economy could have on occupancy. Apartment complexes we once serviced dropped from 95 percent occupancy to as low as 85 percent. Suddenly, landlords were spending money on their vacancies rather than on the security that keeps their current tenants safe.”

According to Queen, focusing on the surface rather than looking in depth at potential economic downturns is often what gets business owners into trouble.

“A bad location is usually the result of not enough research,” he said. “Locations can often look good initially but turn out to be a poor investment if the business owner is only given information that compares the retail value of the property.  A good real estate broker digs much deeper to discover the factors that matter most to the success of the business, such as potential underlying issues with the economy.”

However, a real estate slump doesn’t mean it’s the end of the road. Often times, a creative approach can turn a tough situation around. For Billiot, this meant broadening his services to bring in more business.

“Our customers love our brand and continue to renew their services, but we couldn’t just rely on word of mouth,” he said. “We had to look at different avenues to our approach, like breaking into small businesses and more dedicated security positions instead of focusing solely on apartment, condo, and residential neighborhoods.”

For Keehn, he chose to focus on community involvement. When he opened the doors to his first Checkers in Northern New Jersey in 1993, it was at a time of turmoil in the community. As the state sent 1,500 police officers into the neighborhood, Keehn opened his doors to prepare free meals for not only officers, but the peaceful protesters as well.

“Focusing on building a strong connection with the community was always a goal for us, but in a time when there needed to be unity, that focus became more valuable than we imagined,” Keehn said. I’ve been with the brand for nearly two decades now and have continued to make our commitment to giving back a part of our business model.”

The best advice the three could offer was to do your due diligence, focus on key metrics, and hire a good real estate broker.

“Make sure if you are choosing to invest in a business that you are prepared for the ups and downs,” said Billiot. “If there’s going to be a downturn, do your research and find out how long it’s expected to last and whether or not you can hold out during that time. If not, it may be better to find a new market altogether. Don’t be afraid to lose a little money in order to save a lot of money in the long run.”

In terms of key metrics, know every possible influencer when choosing your location and consider choosing the lowest risk option.

“Know which metrics prominently affect your type of business,” said Queen. “For instance, the amount of business that is generated by walk in clients will dictate ideal location, as well as the increment of sales and peak times within the store or office.  One example of this are locations within a strip. Those often benefit when the surrounding businesses increase foot traffic. Retailors tend to benefit from this whereas restaurants often thrive in standalone locations.”

If there are any questions that remain unanswered in your research or discussions with franchisors, meet with an expert who can help reassure your decision.

“Hire a real estate broker that is willing to listen to your ideas and will take the time to help you make the right decisions,” said Queen. “Someone that cares about the success of your business, not just the commission from the sale, will ultimately guide you in the direction that is best.”