Will a franchisor help me find a good location?

Selecting the right location is one of the most critical decisions a prospective franchisee can make. From site selection to lease negotiations, fit-out and ongoing support, we’ve asked experts across the franchise industry to offer their guidance to help ensure your investment has the best chance of success…

Who’s responsible for selecting a franchise location?

“This typically falls on the franchisee, who has local knowledge of the area,” explains Alan Wilkinson, head of franchise development at The Franchising Centre.

“However, the franchisor should provide help and guidance. This is both in the finding of the location, and also in negotiations with the landlord.”

After all, the whole point of franchising is that you gain the benefit of a franchisor’s experience.

Brian Duckett, former chairman of The Franchising Centre, says that different franchisors work in different ways. “It often depends on whether they plan to take the head lease themselves and sub-let to the franchisee.

“Whoever selects the site, it is essential that the franchisor gives their written approval and is happy that it’s potential is sufficient for the franchisee, assuming they diligently follow the system, to be successful.”

Vicky Wilkes, head of legal at Aston Villa Football Club, adds that franchisor involvement in finding a location can vary hugely. “It can range from a section in the operating manual that offers guidance on the selection of premises, through to more hands-on assistance,” she explains. Some large franchisors will even have their own property team.

Sub-letting

Franchisors may sub-let properties they have leased themselves, sometimes adding a fee to cover administrative costs.

Shelley Nadler, legal director at Bird & Bird, says, “These costs can include the administration of rent collection, surveyors costs, the cost of inspections […] and to compensate the franchisor for its ongoing liability in having to be involved in the leasing arrangement.”

Carry out your own research too. Make sure you’re satisfied with the suitability of any location before you sign any agreements.

Nadler adds, “Taking a lease of premises is not without risk. You should always consult a solicitor before committing yourself.”

Benefiting from the franchisor’s experience

Alan Wilkinson, head of franchise development at The Franchising Centre, highlights the value of franchisor expertise when looking for a location for your franchise.

“If you are joining a property-based franchise, be that retail, food and beverage, or service sector, then opening in the right location can be critical. The franchisor will have experience from the existing network of what type of location, footfall and demographic area they require in order to operate a successful unit.”

Does my franchisor have to approve my site?

Even if you find a promising site yourself, the franchisor will usually want to assess it. This is to protect brand reputation and ensure commercial viability.

Shelley Nadler notes: “Franchisors will normally have criteria for judging whether a territory is suitable. Retail, hotel, food and beverage, and product-based franchise opportunities rely on customers visiting the premises. This means franchisors are likely to require control over the location of their franchisees’ premises in order to protect the reputation of the brand.”

Louise Harris, principal at Franchise Projects, adds that data-driven evaluation is crucial. “A franchise location, or territory, can be based on a number of criteria, including:

● number of people living there

● number of commercial and/or residential properties

● distance and number of similar businesses

● population data

“In the case of a retail premises, there should be a guide on passing footfall or similar measures that help build the ‘perfect’ location. In a young franchise, this information should come from a pilot franchise and be refined as more is learnt about successful or unsuccessful territories.”

Can I relocate my franchise if sales are poor?

Franchisees sometimes consider relocating due to poor sales, but Shelley Nadler cautions that this is governed by the franchise agreement. “Often, franchise agreements will contain either a prohibition against moving the business to a different location, or a general relocation clause that sets out the parameters for moving the business.

“If the franchise agreement contains a prohibition, you will need to approach the franchisor with your idea and ask the franchisor to allow your move.”

Franchisors will generally want to review new locations to ensure they meet brand standards and are commercially viable.

“The franchisor may want to review the terms of the new lease. They’ll want to make sure that the new premises are fitted out to the brand standards,” Nadler continues.

“The franchisor will want you to locate to a new property and re-fit it as quickly as possible to minimise any lost profits.”

Will the franchisor help with fit-out and furnishing?

For retail franchises, the franchisor will usually set out the design and shopfitting requirements. John Pratt, senior partner at Hamilton Pratt, notes: “Usually, franchisors require franchisees to undertake shopfitting themselves at their own cost. In this case, you almost certainly have to comply with the designs prepared by the franchisor. In many cases, you will also have to make use of the franchisor’s nominated shopfitters.”

Franchisors may also provide contacts for architects, builders and lawyers to simplify the process. Pratt adds: “They may either recommend or require that franchisees use these.”

Conclusion

Selecting the right franchise location is a collaborative process between the franchisee and franchisor. You’ll need to balance your own local knowledge with the franchisor’s experience, brand standards and network strategy.

Whether it’s evaluating territories, negotiating leases or setting up premises, understanding the franchisor’s role and the terms of the franchise agreement is essential to securing a site that supports your long-term success.