Location, Location, Location: Five Tips to Help You Choose the Right Franchise Real Estate

Real estate is one of the most important things you need to consider when you’re opening a brick-and-mortar franchise, but for many franchisees, it’s often relegated to an afterthought. They focus on finding a brand that aligns with their passion and may even put a lot of effort into grabbing a territory that’s close to their heart, but they don’t start seriously scouting locations for their storefront until after they’ve signed the franchise agreement and paid the franchise fee.

The best time to scout for franchise locations is while you’re researching the brands. Ideally, you’ll want to hang up your shingle in an area where your brand will be in high demand among the local demographic. Easier said than done, I know, but still a reasonable goal.

If you’re new to the franchise world or an old hand who still struggles with finding that strategic spot, here are five tips that will hopefully make the process of selecting franchise real estate a bit more manageable.

1. Don’t Buy on the Cheap

“You can pay for a location once, or you can pay for it every single day.” This pearl of wisdom comes from Ben Little, a man who has made his fortune franchising Zaxby’s and SweatHouz stores. Basically, his point is that a prime location will be more expensive upfront, but a less expensive location may end up costing you revenue and foot traffic in the long run.

2. Piggyback off a Successful Brand

Retail juggernauts like Target, Starbucks and Whole Foods don’t just choose their locations at random. They spend a lot of money researching potential markets before making the decision to expand. As an entrepreneur, you probably can’t afford that kind of market analysis, but you can certainly benefit from the efforts of those who can. Opening your franchise near – or better yet, next door to – a non-competitive business with a customer base comparable to yours will provide you with a prebuilt source of clientele. 

3. Take Heed of the Competitive Landscape

Let’s say you’re thinking about opening a pizzeria at a certain location, but there aren’t any restaurants around for miles. Those of an optimistic bent might think they’ve just stumbled into the opportunity of a lifetime, while those of a more cautious nature might be asking themselves, “Why?” Do some digging and make sure there’s a market for your franchise at that spot before you commit to it.

4. Dig into the Demographics

Even if you’re letting the major retail outlets do the heavy lifting when it comes to market research, that doesn’t let you off the hook completely. You still need to have at least a rudimentary idea of the population in the area – average age, average income, average family size, etc. Hopefully you’ll already have some idea of the kind of customers that will be drawn to your business. If so, make sure your business is conveniently located for those people.

5. Lease Before You Buy

Real estate is expensive. I know, right? Well, while you’re scrambling to find the socks I just no doubt blew off your feet, let me elaborate. You may not be able to afford to own the property outright when you’re first starting, but that shouldn’t discourage you from making plans to own it eventually. Owning real estate means tax benefits and loan equity; it also makes your business more attractive to future buyers if you ever decide to sell. So lease the land until your franchise is up and running and your numbers are in the black, and then look into the possibility of buying. 

Hopefully, these nuggets of wisdom will help you choose the right spot for your franchise, or at the very least encourage you to start scouting locations while you’re still doing your due diligence. If you’re taking your first steps on your franchise journey or if you’re still trying to decide if franchise ownership is right for you, the 1851 Franchise team is here to help.