Seems easy, huh? After all, it says “Available for Lease”. I’ll just give them a call, find out the rent, and go down there and sign the lease. Unless you’re an experienced commercial real estate broker, or much better, an experienced franchise real estate consultant, you’ll give away the farm as they say, paying too much, committing for too long, and not getting half of what you could have if you only knew the right questions to ask—and how to get the right answers.
Well, I’ve bought cars and houses you say—I’m a pretty good negotiator. Could be, but unless you’ve selected retail real estate sites and negotiated the terms and conditions of a shopping center lease before, and more than once preferably, you won’t be much of a match for the Landlord’s leasing agent and attorney. OK, then, I’ll get a commercial real estate agent on my side—that will level the playing field, right?
Consider this (with all due respect to my colleagues in commercial brokerage):
- Many reputable brokers represent Landlords as well as tenants, and they have long standing relationships that are nurtured by them bringing in Tenants. Hard to serve two masters; even with the best of intentions.
- Brokers have broker’s licenses. Of course they do, you say; you want me to use someone who is unlicensed? No, but brokers earn their living making commissions. When the lease is done, they get paid and walk away. You have a 5, 10, or 20 year lease obligation—and you can’t.
- Real Estate Brokers have real estate training, not site selection training. It’s different. Real Estate training is transaction related, and focuses on duties, obligations, forms, and laws. Site selection training is how to find the right site: Job 1 as Ford says. Let’s find the person who is trained in market planning and site selection first, and then let’s look at his or her licensing credentials.
And here’s something that is important: site selection doesn’t start with driving around looking for what spaces are available. It starts, instead, with an analysis of what are the key ingredients necessary for success for your specific concept, and that can be tricky.
The best way to answer that question is to visit franchise stores that are already up and running. If the operator will give you an idea of how he does, and you visit enough of them, you’ll be able to start ranking them: 1-5, with 1 being a homerun. Then as you evaluate potential locations for your own store, see if you’ve got the same ingredients—retail synergy, demographics, and site-specific criteria.
More on this to come. Site selection is critical—let’s get it right; right from the beginning. Send me your questions and comments, and we’ll tackle it together.
Jeff is a former real estate executive with several major franchisors, including McDonalds and Blockbuster, and is a licensed