How to Open a Franchise - Leasing Property

Article Written By: Daniel Cargille

Whether you've decided to open a new business of your own or you'll be investing in a new franchise opportunity, the location plays a big part in the success of your business. Some franchises require the erection of a new building however many give you the opportunity to lease commercial space. If you're going to lease there are a number of points you should consider as you look for the ideal location.

Rent: Do your local research and ensure that the rent is fair. It's not uncommon to have some retail outlets fall into a higher price bracket - especially if they're new. Find out if the rent is comparable to the locations around the area.

Term: You may decide that the location isn't right for your business once you're in it. Find out what the lease or property owner requires for a lease term be it month to month, 6 month, 1 year or longer. It helps to know if they're negotiable on this point.

Floor Area: Part of your research into the franchise should be how much space you'll need. Corporate franchise representatives should be able to give you ideal floorplans and size needs. Compare these to the space that's available within a given location. This is important because rent is often based on the per sq. ft. charge.

Rental Increases: When comparing the locations you like you need to pay attention to whether the locations work on a fixed rent lease of if there is a consumer price index. If rent includes CPI then you need to negotiate a percentage cap in the lease agreement.

Percentage Lease: The property owner of a location you choose may - on rare occasions - ask you to pay a percentage of your sales on top of the fixed monthly rent. Negotiate out of this type of agreement and have it removed if possible.

Tenant Improvements: It should always be in writing as the responsibilities of the property owner and the franchise owner's responsibilities to prep the commercial space to be open for business. This way there's no confusion on electrical or plumbing, HVAC, windows, doors, flooring, etc.

Provision for Expansion: If you think that your franchise may need to grow in space to accommodate a growing customer base or employees then make provisions in your lease to anticipate for these future changes. If you do plan to grow, make sure that the space offers the ability to do so.

Conflicting Business: Always try to negotiate a clause that keeps conflicting businesses out of the structure. While this may not be possible in a large shopping center or mall it's entirely possible if you will work within a plaza or strip mall.

Recognizing and considering each of these areas can help you tune into the most important aspects of a lease should you choose to rent in order to open your franchise. In some cases, the cost of a lease and the limitations within create more headache and value reduction - which ideally puts purchasing property in a better light.

About the Author

Opening a Portland franchise is a proven business format that can grow quickly. If you want to find self-employment success, then work with us to buy into your own franchise Portland.

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