Franchise Real Estate: Efficiency and Availability are King

For more than 160 years, the franchise model has thrived by creating proven systems for entrepreneurs to follow. Whether it’s operations, training, innovation or technology, a brand typically lays out a blueprint for how franchisees to use to run a successful business. However, the old adage remains true: it’s all about location, location, location. A key factor that can make or break the success of a franchise is, of course, the real estate.

As brands become nimbler and create efficiencies within their operations and technology, their real estate needs may evolve over time. Franchise brands can be found in strip malls, standalone buildings, college food courts and nontraditional locations like airports – and everywhere in between. Each type of real estate has its positives and negatives and it’s up for the brand to optimize what types of locations work best for their brand.

For Checkers* & Rally’s, the key piece to its approach to real estate is to provide different options that franchisees can choose from. This also serves as a differentiator for the brand, offering opportunities to prospective franchisees that other brands can’t, as well as more flexibility with landlords and developers. 

“It’s important for brands to have different buildout options for a number of reasons,” said Kris McDonald, director of real estate for Checkers & Rally’s. “Offering options gives a brand greater flexibility to attract franchisees that are looking for the best deal but also to capture the attention of landlords and developers who are going to assist in getting the restaurant built. Just like a franchisee would look for a deal, so too would landlords on how they want to deliver pieces of property and tenant mix in their shopping centers.”

In 2016, Checkers & Rally’s introduced a modular option, which is built offsite in a controlled environment, protecting it from delays due to weather. The modular design saves up to 12 weeks in construction and can be up to $100,000 cheaper than traditional builds. This innovative option has reignited interest from existing Checkers & Rally’s franchisees as well as caught the attention of major players in the franchise world. 

Another factor that has put Checkers & Rally’s ahead of the pack when it comes to speed to market is its pipeline of approved sites. The Checkers & Rally’s team identifies real estate opportunities in their target markets for growth, and then recruits franchisees for those sites.

“The approach we take in approving sites first expedites the process of opening a franchise even further,” said McDonald. “If we’ve identified a market we’d like to grow in, we just have to match the right franchisee to the market and help them choose one of approved sites. The whole program is designed to get to a more efficient, quicker and turnaround time.”

Whereas a drive-thru path and traffic flow may be important to a fast food franchise, for brands in other segments, other considerations come into play. A brand that’s winning in real estate in the fitness segment of franchising is Workout Anytime, a 140-unit fitness franchise that finds success with locations in strip malls. Chief operating officer Mark de Gorter notes that unlike many other industries like book stores or other retail shops, the brand has benefited from Amazon’s takeover of many other business sectors.

“Because Amazon is selling everything that any strip mall would sell, it’s opening up opportunities for us to negotiate better real estate deals,” de Gorter said. “There is more real estate available in the types of areas we thrive in, and there’s more supply than demand, conceivably making it easier to negotiate deals for real estate for our franchised locations.”

Workout Anytime senior vice president of franchise development Randy Trotter adds that five to seven years ago, Workout Anytime was not the darling of the industry, but in recent years, Workout Anytime has become a sought-after brand.

“Gyms had a bad name because other brands would take money and never open the doors. But now, we’re sought after because a Workout Anytime can bring up to 200 people a day to a shopping center, which helps bring traffic to the other businesses in the center,” said Trotter. “Plus, we help our franchisees negotiate the best real estate deal, so we’re attractive to both prospective franchisees and landlords.”

Regardless of the type of franchise, the keys to good real estate remain the same across industries.

“Access, convenience, and ability to see it, whether it’s presence on the street or signage are really the main drivers when selecting real estate,” said McDonald.