If you talk to many franchisors, one thing you notice is that most offer location assistance. Based on what they know of their business, they choose spots in your local area they believe will give you the best chance of success. But do they really know what they’re talking about? Should you listen? Can you even say no?
What’s Your Gut Feeling?
Before you sign anything, discuss location. Don’t hand over a dime until you know you’ll be setting up shop in a place you believe will be successful. When they offer recommendations, check them out yourself – in person, and at a couple times of day. There’s no substitute for actually going there.
Is there a lot of foot traffic? What about parking? Is it near a busy office park where your business is likely to be limited to business days and normal office hours, or are you standing in front of a popular shopping center? What kind of people do you see around? Are you located near other businesses that might draw in more of a crowd, or is it near businesses that might siphon off your customers? These things matter. If you’re opening a healthy fast food joint, being near a paddleboard rental company could be a huge bonus. On the other hand, that fit and active crowd might not respond as well to a donut franchise.
Similarly, you might find that a franchisor’s algorithm picks a spot that has all the right stats, but places you on the edge of an industrial park with plumbing supply and electrical wholesalers. There’s nothing wrong with those types of companies, but their warehouses can be large, with very few employees. In other words, they detract from local population/employee density, making it a less desirable area for something like a food franchise.
If you have time, consider talking with some of the nearby business owners (where possible). If they’re in the same building you’d be leasing from, ask them how they like the management company or landlord. Ask if there are any interesting traffic patterns, like big after school crowds or a pre-work rush. Remember, though, that companies you’d be in direct competition with may not give the best answers if they don’t want a new competitor coming in.
Study Local News
Hyper-local factors can also impact the desirability of a location, and a franchisor might not be aware of those issues. For example, one local bird shop rented a space, only to be forced to terminate the lease less than a year later. Why? A construction project had been approved next door, and once work began, the noise frightened their birds and kept a lot of customers away. Parking spots were filled with construction vehicles, and everyone around found the constant machinery sounds annoying. If they’d looked into approved projects in the area, they would have known it had been on the books for ages.
Franchisors Want You to Succeed, but They Don’t Care Like YOU Do
Make no mistake – franchisors DO want their franchisees to succeed. Still, they know that some locations are likely to fail, and they’re more invested in overall success rate than the success of any one franchisee. They aren’t the ones putting their life savings into the franchise. If you’re putting a lot of your own money in, you need to go the extra mile and make sure they’re not making bad decisions for you – and do it BEFORE, not after you’ve signed papers and handed over money. Some companies are entirely happy to work with you, and others are less flexible. The key is to find a company that gives you a good feeling about things and treats you fairly.
Any other tips for dealing with franchisors as you select the location for your business?