Location, location, location. These words run true for franchise businesses as well. Today in our “Franchise Lawyer Special” series: choosing the right location and premises can be key to the success of your franchise business. As with any business, bringing the right clients in the door will dramatically affect the sales and reputation of your business.
With the increase in online businesses the physical presence of some businesses has become less significant. However, a large number of franchises still rely heavily on a physical presence on our streets.
What are my options for choosing a premises?
There are a number of options available for securing your franchise premises:
- Franchisee leasing a commercial premises: This is the most common option and has a relatively low barrier to entry. It is important to ensure that the lease term corresponds with the franchise term.
- Franchisor leasing a commercial premises. Large shopping centres often prefer to lease their premises to known franchisors as opposed to individual franchisees. In this case the franchisor licences the premises to the franchisee for the term of the franchise.
- Buying a commercial premises: This is a major financial investment and this option is rarely adopted by franchisees.
How do I decide on a location?
This will depend very much on the product or service your franchise business is offering. Are you running a hairdressing business or a fast-food chain? Finding a location on a main road or in a busy shopping centre may be advisable if you are running a business that is dependent on passing trade. You will most likely find higher rental costs in these locations so it is important to factor this in to your business model when determining the viability of the business.
A franchise agreement may specify the exact location of your premises or limit you to opening the franchise business in a defined territory. You should familiarize yourself with the restrictions imposed under the franchise agreement before commencing your due diligence on finding your ideal franchise location/premises.
Once you fully understand where you can operate your franchise business under the franchise agreement, you should dedicate considerable time and resources to finding your ideal location, as getting it right will be paramount to success. To speak with a franchise solicitor, contact LegalVision on 1300 544 755.