The 8 Essential Real Estate Questions Franchisees Should Ask Franchisors

Choosing and securing the right location for a business is one of the most important parts of the franchising puzzle, which is why franchisees need to ensure that they have an in-depth understanding of the process before signing on the dotted line.

By Luca Piacentini1851 Franchise Managing Editor

9:09AM • 04/26/23

Investing in a franchise can be a great way to start a business and become your own boss, but it's important to do your due diligence before signing on with a franchise brand. One key area to explore is the real estate requirements and options for your franchise location.

Here are eight essential real estate questions franchisees should ask franchisors before signing on with the brand:

What are the real estate requirements for a franchise location?

It's important to understand the real estate requirements for your franchise location, including the size, location and layout of the space. Some franchises may require a specific amount of square footage, while others may have more flexible requirements. Franchisees should also ask about any zoning restrictions, building codes or other regulations that may affect their real estate options.

Can I choose my own location, or will the franchisor help me find a site?

Some franchise brands give franchisees the option to choose their own location, while others may offer assistance in finding a site. It's important to understand what level of support the franchisor will provide and whether you have the flexibility to choose a location that meets your needs and budget.

What is the cost of real estate in the desired location?

The cost of real estate can vary significantly, depending on the location and local market conditions. Franchisees should do their own research to understand the real estate costs in the desired location, including leasing or purchasing costs, property taxes, and maintenance expenses. They should also ask the franchisor for any insights or data they have on real estate costs in the area.

What is the timeline for securing real estate?

Securing real estate can be a time-consuming process, so it's important to understand the timeline involved. Franchisees should ask the franchisor how long it typically takes to secure a location, and what factors may affect the timeline. They should also ask about any deadlines or milestones they need to meet in order to stay on track with the franchisor's requirements.

What kind of support does the franchisor provide for real estate negotiations and leasing/purchasing agreements?

Franchisees should ask about the level of support the franchisor provides for real estate negotiations and leasing/purchasing agreements. Some franchisors may offer assistance with negotiating lease terms or purchasing agreements while others may leave these decisions up to the franchisee. It's important to understand the level of support you can expect and whether you feel comfortable handling these negotiations on your own.

What are the key factors that contribute to a successful franchise location?

Franchisees should ask the franchisor about the key factors that contribute to a successful franchise location, such as foot traffic, accessibility, parking and nearby businesses. Understanding these factors can help franchisees make informed decisions about their location and increase their chances of success.

What kind of support does the franchisor provide for site selection and build-out?

Some franchisors may offer support for site selection and build-out, including assistance with design, construction and project management. Franchisees should ask about the level of support they can expect and whether there are any costs associated with these services. They should also ask about any requirements or guidelines for the build-out process.

What is the franchisor's policy on renewing or terminating leases?

Franchisees should ask the franchisor about their policy on renewing or terminating leases, and whether they have any flexibility in these arrangements. Understanding the franchisor's policy can help franchisees plan for the long-term and avoid any unexpected expenses or disruptions. Franchisees should also ask about any penalties or fees associated with terminating a lease early.

By asking these essential real estate questions, franchisees can better understand their options and make informed decisions about their franchise location. It's important to work closely with the franchisor and other experts, such as real estate agents or attorneys, to ensure that you find the best location for your franchise business.