5 mistakes that franchisees make when looking for real estate for business



Avoid these common mistakes so that your next real estate decision is right.

June 21, 2021

6 min read

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As a franchise owner, one of the most important decisions you must make is finding the right one. the property for your business. Successful franchisees are constantly looking for ways to scale and get new locations. Everybody heard the cliché location, location, location with regard to property. These are said to be the three most important factors when it comes to buying real estate. The truth is that the location of your this is just one of the many factors that a franchise owner should consider when looking for a property. That being said, the location of your business is very important, so don’t overlook these common mistakes that franchisees face when looking for the perfect property.

1. History can repeat itself

Location history can be very revealing and extremely helpful when choosing a property. For example, if you’re looking for a new location for your pizzeria and stumbled upon a piece of real estate that seems like a great location for your business, be sure to research the history of what was there before. You may find that while the area seems ideal, there were five other pizzerias in the same location that failed. This information doesn’t necessarily mean yours will fail, too, but it definitely requires a deeper investigation of this place before you make a decision.

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2. Size matters

Another mistake that many franchisees make when looking for real estate is incorrectly calculating the size of the plot required for their business. More is not necessarily better. When building a business, every penny counts, so it is important to make the right choice for any purchase. Just because you are getting a great real estate deal does not mean that this is the right choice. Sometimes you can find real estate with a very high cost per square meter, so there is a tendency to use the price and go further. This could be a great opportunity or an unnecessary decision. Be sure to do your due diligence and evaluate all the properties you come across. No matter how good a deal might look on paper, if you’re buying a property with more floor space than what you really need, the extra floor space needs to be converted into profitable space. If not, then this is not really “your” business.

3. Building versus buying

The larger the business, the more opportunities you have to scale and expand your franchise’s affiliates. When deciding whether to build a new location or buy an existing structure, it is important to look at your numbers. At first glance, building a new location may seem more expensive, but this is not always the case. There are many cases where the amount of work required to convert an existing structure to what you need for your franchise location far exceeds the amount it would cost to simply build. Some franchises have a very specific plan that they must follow; this can limit your real estate options. Make sure that the cost per square foot of the required development does not exceed the cost per square meter for the full development. In some areas, these two numbers can be very similar, which actually gives you more flexibility in your choice of real estate options and locations. This can be helpful if you are forced to follow a specific real estate plan or guide for your franchise.

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4. Corporate identity is important

You must choose a property that allows you to showcase a cohesive and recognizable image. That said, not all companies require the same branding style. For example, if you own a franchise in a large restaurant chain, it is imperative that the property you choose is recognizable for that established brand. Many large franchises provide franchisees with short descriptions of building specifications, regulations, and possibly even approved locations. But even smaller franchises must follow these guidelines and ensure that they maintain a recognizable vision for their business in all of their locations. This means that even if your particular franchise allows for different styles of real estate, you still need to make sure the locations you choose allow for the appropriate signage or color scheme to showcase your brand identity.

5. Marketing issues

Sometimes the property you choose isn’t as important as the marketing you choose. As a franchisee, you can choose the perfect property in a beautiful area, but you still have bad luck in that location. This happens when you put too much emphasis on real estate and not marketing. The property you choose is extremely important, but it is complemented by the marketing you do for your business and its locations. Whatever real estate decision you make, you need to create for this place. As a real estate coach, I recommend that you start developing your marketing plan as soon as you decide on a franchise location. So while you prepare new properties for your business, you are also preparing the grounds for your arrival and creating an exhibit for your new franchise location.

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There are many factors that go into choosing the perfect property for your business and franchise location. However, as with any business decision, data and information are critical. Make sure you have a business plan before you start looking for real estate. A good business plan will provide you with the information and perhaps even the specifications you need to help you select the perfect property for your franchise.


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