Why Franchisors Need To Add a Real Estate Fee to Their FDD Before It Is Too Late

Franchise Realty Partners, a full-service commercial real estate company that operates as an internal real estate department for emerging franchisors, provides the relief many emerging franchise brands seek. The commercial real estate market is not easy to work in, and franchise owners want to find the absolute best spot for their business to ensure they succeed.

“A newer thing for franchisors to do is to put a real estate assistance fee in their FDD,” explained Drew McWilliams, founder of Franchise Realty Partners. “A lot of franchisors do not have the ability to hire a real estate director on staff. So this fee gives them the ability to pay for someone to help manage those accounts and real estate responsibilities on a per unit basis.”

For franchisors who cannot afford the high salary to bring a real estate expert in-house, outsourcing this expertise and its much lower cost ensures franchisees receive the same high-quality support without damaging the franchisor’s bottom line.

“I would encourage franchisors to add the fee to their FDD before it’s too late because you only release your FDD once per year,” McWilliams explained. “You can put a $3,000 real estate assistance item in the FDD, and if they don’t use it, they don’t use it. You’re just saving the franchisee money. There’s no harm, no foul in doing that.”

However, taking the proactive approach and thinking 12 months ahead ensures that, should a franchisor need to take advantage of a real estate expert, the funds to do so are accounted for in the FDD. 

He added, “If someone thinks that, in the next 12 months, they’re going to need some additional real estate assistance, why wouldn’t they add that to their FDD in their next renewal?”

With over two decades of real estate experience as well as experience in the franchise space, McWilliams understands the intricacies of both.

“This FRP concept was born because, as a franchisor, I knew from actual experience the pain points that franchisors go through,” said McWilliams. “That is the number-one reason we stand out in the real estate industry. We speak, talk and walk franchising. We understand the complex process of outsourcing an essential component of the onboarding process.”

As McWilliams said, if that fee ends up not being used, it only saves the franchisee money.

However, with that fee present, franchisors are empowered to reach out for support as needed. Location is a critical aspect of the onboarding and build-out process, and it can impact both the franchisee’s and franchisor’s success long into the future.

With Franchise Realty Partners’ turnkey model, franchisees can get into great spaces and open their doors even sooner, bringing quicker returns to owners and royalties to franchisors.

For more information on Franchise Realty Partners, visit https://franchiserealtypartners.com/.