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I’m considering investing in a retail franchise. Who chooses the site for the business?
strong>John Pratt writes:
The whole point of franchising is that a franchisee has the benefit of the franchisor’s experience, so franchisees would certainly expect the franchisor to have some input in selecting their premises. Precisely what involvement that is will depend on the terms of the franchise agreement.
At the low end of the range, franchisors would simply reserve the right to approve the premises and possibly the lease of the premises. At the other extreme, franchisors will set out in detail the process franchisees have to go through in selecting premises, supplying the franchisor with details of the property, organising franchisor visits to the premises and obtaining the franchisor’s approval. Some large franchisors will have their own property team and will provide prospective franchisees with premises that have already been located.
Prospective franchisees should expect some support from a franchisor in finding premises, whether that support relates to the franchisor having contacts with large estate agents, which enables it to become aware of suitable premises sooner than the franchisee would, the franchisor having specific criteria that needs to be applied in choosing premises or whether franchisors are prepared to send their personnel to assist in choosing the premises.
John Pratt is senior partner at specialist franchise firm Hamilton Pratt and has advised franchisors for over 25 years.
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