1851

Location, location, location. Real estate has always played a massively important — and sometimes difficult — role in the franchising process. Now, as interest in franchising&nbsp;<a href="https://www.forbes.com/sites/forbesbusinessdevelopmentcouncil/2021/06/04/tracking-the-growth-of-franchising/?utm_source=1851franchise.com&utm_medium=article&utm_campaign=how-to-master-lease-negotiations-in-the-franchising-industry-2718812" target="_blank" rel="nofollow">skyrockets</a> following the uncertainty of the COVID-19 pandemic and competition within the commercial real estate market&nbsp;<a href="https://www.wsj.com/articles/commercial-real-estate-sales-and-values-surge-to-records-11635249600?utm_source=1851franchise.com&utm_medium=article&utm_campaign=how-to-master-lease-negotiations-in-the-franchising-industry-2718812" target="_blank" rel="nofollow">booms</a> due to pent-up demand and a lack of inventory, it has never been more essential for franchisors to master the complex real estate process and ensure franchisees can secure attractive lease terms.&nbsp;That is why connecting with a trusted real estate partner like Franchise Realty Partners can be essential in helping franchisors avoid any unnecessary mistakes along the way.&nbsp;To start, the two biggest factors to consider in a lease negotiation are the rent requirements and the tenant improvement allowance (the amount of money the landlord will contribute to turn their building into the designated concept). These two items can have a “see-saw effect” — as one goes down, the other is bound to come up. Make sure the broker you work with asks about about which is most important to you, the client, and pushes that agenda the most with landlord. Saving cash upfront for the building improvements, as well as a lower rent, will set the tenant up for long-term success!Another important factor is properly negotiating the “free rent period.” Franchisors, and franchisees, need to ensure they are giving themselves enough time between the lease signing and rent payments commencing. All of the due diligence — getting inspections, zoning confirmation, architect drawing, building permit and civil engineer — can take several months depending on the scope of the project, so franchisors need to ensure they aren’t paying rent before they start collecting revenue.During negotiations, franchisors and franchisees also commonly overlook their ability to add additional lease renewal terms to the contract. This doesn’t cost the tenant anything but gives them the peace of mind knowing that after they spend the time and energy creating a successful business, they won’t be kicked out of the space at the end of the original term. It also means the landlord can’t raise the lease rate without safety renewal parameters in place.There are also several potential red flags that may come up during lease negotiations. For example, maintenance responsibilities, specifically that of the structural integrity of the building, should always fall on the landlord. A franchisor of a brand once told me a story about how their leased space was flooded due to a plumbing issue under the building’s slab. Not only did the business lose income while being forced to close for repairs, but the lease dictated that the tenant would be responsible for the cost even though the plumbing was installed prior to the tenant taking over this space. These are the kind of nightmare scenarios that can easily be avoided with the right lease terms.Remember that negotiating a lease is like playing a professional hand of poker — the faster a potential tenant tries to rush through it, the more the landlord is going to feel that desperation and hold firm to their terms. The best deals usually take three rounds of negotiations, which typically includes 30 days of negotiations between brokers and agents and then an additional 30 days finalizing the lease contract language between attorneys.For both franchisors and franchisees, the entire real estate process can be overwhelming, especially the lease negotiations. With over two decades of collective experience in both franchising and commercial real estate, Franchise Realty Partners offers a turn-key real estate solution to help franchisors with the important aspect of site selection for their franchisees, handle all the communication with brokers, and, last but not least, negotiate leases. This allows franchisors and franchisees to focus on their most important task of day-to-day operations and growth, while feeling confident they are well-equipped to secure the type of attractive lease terms that will position their brand for greater success in the future.<a href="https://www.linkedin.com/in/drew-mcwilliams-3b041a5?utm_source=1851franchise.com&utm_medium=article&utm_campaign=how-to-master-lease-negotiations-in-the-franchising-industry-2718812" target="_blank" rel="nofollow">Drew McWilliams</a> is the founder of <a href="https://franchiserealtypartners.com/?utm_source=1851franchise.com&utm_medium=article&utm_campaign=how-to-master-lease-negotiations-in-the-franchising-industry-2718812" target="_blank" rel="nofollow">Franchise Realty Partners</a> and a commercial real estate broker in the Carolinas with over 20 years of real estate experience. Drew and his wife also own a children’s preschool franchise, Ivybrook Academy, which currently has 52 locations open or under development. After years of operating in both the franchise and real estate space, Drew knows there is a disconnect between what third-party real estate companies offer and what franchisors need. Now, he is passionate about solving companies’ real estate pain points and helping them scale and grow.

How to Master Lease Negotiations in the Franchising Industry

1851 Franchise

Real estate is often an unnecessary pain point for both franchisors and franchisees, which is why leveraging the knowledge and support of trusted experts in the field can be essential to achieving the most attractive lease terms.

This brand page has been paid for by 1851. Content within this page that is paid will showcase a Sponsored icon. This means the brand has engaged 1851 FRANCHISE to write the content. Content without the Sponsored Icon is aggregated media placements the brand earned. Questions can be sent to editorial@1851franchise.com

how-to-master-lease-negotiations-in-the-franchising-industry

TruBlue Home Service Ally

TruBlue Featured in USA Today as Key Player in Helping Seniors Age Safely at Home

trublue-featured-in-usa-today-as-key-player-in-helping-seniors-age-safely-at-home

Right at Home

Right at Home Marks 30 Years With Continued Franchise Growth

Right at Home Marks 30 Years With Continued Franchise Growth, Tech Advancements, and Strong System Engagement in First Half of 2025

right-at-home-franchise-growth-2025

KidStrong Franchising, LLC

Unlocking Superpowers: How KidStrong Is Building the Next Generation of Confident Kids — and Thriving Franchise Owners

kidstrong-franchise-confident-kids

Image of a kid growing up, developing with kidstrong, high fiving and smiling. 

How KidStrong has Become the Franchise Disrupting Child Development by Partnering with Purpose-Driven Franchise Owners 

kidstrong-franchise-opportunity-child-development

Picture of kids for franchise business Kidstrong which focuses on child development and fitness

KidStrong Is Pediatrician-Recommended for Raising Confident, Capable Kids and Families Can't Get Enough

kidstrong-child-development-program

Buying a Franchise Masterclass

 Franchise Opportunities

Get Support Buying a Franchise

How to Buy a Franchise White Paper

How to Buy a Franchise

How to Sell Franchises

How to Grow a Franchise

Find a Franchise Supplier

1851 Franchise Opportunities

Franchisor News

Franchisor Power Rankings

FranCamp Mastermind Summit

Franchise Development Website Builder

Franchise Resources

What ALEC-Laffer's Report Means for Franchising

Website Awards

Power Rankings

About 1851

Advertise on 1851

Contact 1851 Editorial

Terms of Use

1851 Login

GROWTH CLUB LOGIN

facebook

instagram

twitter

linkedin

youtube

Image of Donald Trump pointing with red stripes in the background

August 1 Tariff Deadline Is Said to Have ‘No Extensions’: What This Could Mean for Franchises

august-1-tariff-deadline-franchise-impact

What June’s Jobs Report Means for the Franchise Industry

what-junes-jobs-report-means-for-the-franchise-industry

Drone Delivery Takes Flight in QSR: The Future of Franchise Operations?

drone-delivery-takes-flight-in-qsr-the-future-of-franchise-operations

Chick-fil-A Tops Customer Satisfaction Rankings for 11th Year as Challenger Brands Gain Ground

chick-fil-a-tops-customer-satisfaction-rankings-for-11th-year-as-challenger-brands-gain-ground

Technomic Releases Annual Ranking of the Top 15 Fast-Food Chains in the U.S.

technomic-releases-annual-ranking-of-the-top-15-fast-food-chains-in-the-us

Hooters Leans Into Franchising With Closure of 30 Company-Owned Stores - Agg - 1851 Franchise

Hooters Leans Into Franchising With Closure of 30 Company-Owned Stores

hooters-franchise-model-company-owned-closures

Rising Jobless Claims Could Signal Challenges — and Opportunities — for Franchising

rising-jobless-claims-affect-franchising

The Ultimate Guide to Selling Franchises: How To Create a Strong Incentive

how-to-build-strong-incentives-to-attract-prospective-franchisees

How Vishal Juneja Turned a Family Tradition Into a Paris Baguette Franchise

How Vishal Juneja Turned a Family Tradition Into a Paris Baguette Franchise Built on Heart and Community

paris-baguette-franchise-rockaway-new-jersey-vishal-junjea

Franchisee spotlight graphic with photo of Ricki Oberoi and Layne's Chicken Fingers logo

Multi-Unit Wendy’s Operator Signs 12-Unit Deal With Layne’s Chicken Fingers

ricki-oberoi-laynes-chicken-fingers-growth

Franchisee spotlight graphic with photos of Danielle Rosemond & Usman Khan & TruBlue logo

Family Members of Local Physicians Bring TruBlue Franchise to North Central Nassau, Long Island: A Health Care-Inspired Approach to Aging in Place

family-brings-trublue-franchise-to-north-central-nassau

Top 25 Franchise Marketing Leaders: Kelsey McManemin — Vice President of Marketing, HTeaO

top-25-franchise-marketing-leaders-kelsey-mcmanemin-vice-president-of-marketing-hteao

How to Master Lease Negotiations in the Franchising Industry

MORE STORIES LIKE THIS