Canadian Franchise

Understanding the 3 Steps to Quality Lease Negotiation

from Scott J. Simcik, president and CEO. FGP Commercial Leasing.

How systematized is your site selection, lease negotiation and lease review?

Lease AgreementThe primary responsibility of franchise industry CEO s is unit-level profitability.

While awarding qualified candidates and providing comprehensive training and support programs are a high priority, a quality three-step location and lease negotiation process will have the greatest impact on retail brick-and-mortar store volume within any industry. An honest appraisal of the strengths and weaknesses of your real estate department and processes is the first step to improve franchisee support.

The cost of acquiring and training a new franchisee, the franchisee’s total investment and the potential income of both parties suggest the importance of deeply analyzing how systematized (or not) your current real estate processes are and how they may be affecting your franchisee annual turnover rate.

Step 1 – Site Selection (Market Visit)

Site selection must include a market visit from a strategic partner who acts as an exclusive tenant representative and works closely with the corporate management team. The same expert conducting each market visit improves the quality for each location. Combining the assistance of local leasing agents and your franchisees’ valuable input gives your brand the highest quality control in identifying perfect locations.

Consider these actions:

  • Develop a pre-leasing questionnaire with a comprehensive checklist. Include defining trade areas within rural, medium, metropolitan and major-metropolitan markets; demographics (population, age, income and ethnicity); minimum and maximum square footage; and tenant mix, visibility and other characteristics unique to your business. Failure to do so reduces the quality of locations for your franchisees as does outsourcing to multiple regional and national brokerage firms and individuals who are not properly trained or supervised by the franchisor on the questionnaire checklist.
  • Review your last 10 franchisee locations and determine how many different commercial leasing agents have performed site selection or market visits on a local level for your franchisees. If the answer is more than one, your site selection process is ineffective.
  • Do not refer franchisees to outsourced regional or national real estate firms that provide real estate services. This commonly used method holds little benefit for franchisees. A highly trained expert who is a true strategic partner, supervised and experienced on your customer and business concept, is most effective when visiting your franchisees’ markets.
  • This exclusive strategic partner should drive three natural trade areas and identify up to 15 locations within each trade area. Maximizing the number of vacancies and including the franchisor and franchisee in the short-listing process accelerates the location search, improves location quality and provides leverage in the lease negotiation stage.

Step 2 – Lease Negotiation

Each franchisee must have an exclusive tenant representative working on his behalf. This individual will have an enormous financial impact on your occupancy rental rate and reducing franchisee start-up costs by negotiating, among other things, an aggressive tenant improvement allowance. Outsourcing these critical economic factors to multiple untrained, inexperienced leasing agents is detrimental to the business.

Consider these options:

  • Develop a real estate operations manual that fully describes the definitions of a vanilla shell, site criteria, building requirements, floor plan specifications, site package, signage and other unique characteristics of your business concept. The absence of this manual will result in a major financial impact and lack of consistency on franchise locations.
  • Determine if your lease negotiation process is too long. Outsourcing to regional and national firms gives away quality and control.
  • Research to determine if the regional or national firms your company has selected to represent its franchisees in lease negotiation also represent landlords in your franchisees’ local markets. The fiduciary responsibility of the franchisor is to ensure exclusive representation and not expose their franchisees to commercial leasing firms who predominantly represent local landlords. These preexisting relationships can be a disadvantage to your franchisee. Assigning your franchisee to an exclusive tenant representative protects their best interest in site selection and lease negotiation. Justifying the use of a dual representation firm to gain access to “pocket listings” is short sighted. These vacancies are equally available to an exclusive tenant representation firm.
  • Evaluate the level of training your company has provided your strategic partner on unit-level economics, build-out terms, free rent, tenant improvement allowance, common area maintenance, taxes and insurance/NNN, personal guarantee limitations, and early termination clauses. It is essential that this representative is highly experienced on a master level to negotiate on the following: by rural, medium, metro, and major metro market sizes; types of ownership (local, regional and institutional); and is able to adapt to the negotiation styles of junior and senior leasing agents.

Step 3 – Legal Review

Legal review is typically the step in the lease negotiation process where flexibility is either gained or lost. A corporate signature, limited personal guarantee andan early termination clause are essential terms to be carefully negotiated into each lease. Common area maintenance fees and taxes and insurance/NNN should be closely examined and negotiated on a line-item basis. However, franchisees will often overlook the importance of these items because they are led to believe by leasing agents that they are non-negotiable and strictly prorated costs passed on to tenants from the landlord. Franchisors will suggest to franchisees to hire any attorney to review their lease. As part of your legal review process, it is imperative to select a real estate attorney who is highly experienced and specialized in commercial lease review and franchisee communications. This will expedite the process with the highest quality and flexibility within the final lease terms at legal rates prenegotiated on your franchisees behalf.

Here are two recommendations:

  • Develop a legal checklist of terms to be negotiated in each lease that protects the franchisor, franchisee, funding, and equipment vendors. Some franchisors will request a franchisor addendum attached to each proposed lease, which protects the franchisor, franchisee, banks and leasing companies.
  • Protect your franchisees from picking and choosing local non-real estate attorneys who are unfamiliar with your brand to review landlord leases. This exposes your franchisee legally and financially to accept unfavorable landlord terms. An expensive legal bill with a protracted eight-week process can bring unnecessary legal gridlock. To achieve the highest quality locations for your franchisees, your ultimate goal is to locate a strategic partner who will act as your exclusive tenant representation firm, and who will provide these three steps of quality lease negotiation.

Scott J. Simcik is president and CEO of FGP Commercial Leasing.

Email: [email protected]

Phone: 800-471-1682

xosotin chelseathông tin chuyển nhượngcâu lạc bộ bóng đá arsenalbóng đá atalantabundesligacầu thủ haalandUEFAevertonfutebol ao vivofutemaxmulticanaisonbetbóng đá world cupbóng đá inter milantin juventusbenzemala ligaclb leicester cityMUman citymessi lionelsalahnapolineymarpsgronaldoserie atottenhamvalenciaAS ROMALeverkusenac milanmbappenapolinewcastleaston villaliverpoolfa cupreal madridpremier leagueAjaxbao bong da247EPLbarcelonabournemouthaff cupasean footballbên lề sân cỏbáo bóng đá mớibóng đá cúp thế giớitin bóng đá ViệtUEFAbáo bóng đá việt namHuyền thoại bóng đágiải ngoại hạng anhSeagametap chi bong da the gioitin bong da lutrận đấu hôm nayviệt nam bóng đátin nong bong daBóng đá nữthể thao 7m24h bóng đábóng đá hôm naythe thao ngoai hang anhtin nhanh bóng đáphòng thay đồ bóng đábóng đá phủikèo nhà cái onbetbóng đá lu 2thông tin phòng thay đồthe thao vuaapp đánh lô đềdudoanxosoxổ số giải đặc biệthôm nay xổ sốkèo đẹp hôm nayketquaxosokq xskqxsmnsoi cầu ba miềnsoi cau thong kesxkt hôm naythế giới xổ sốxổ số 24hxo.soxoso3mienxo so ba mienxoso dac bietxosodientoanxổ số dự đoánvé số chiều xổxoso ket quaxosokienthietxoso kq hôm nayxoso ktxổ số megaxổ số mới nhất hôm nayxoso truc tiepxoso ViệtSX3MIENxs dự đoánxs mien bac hom nayxs miên namxsmientrungxsmn thu 7con số may mắn hôm nayKQXS 3 miền Bắc Trung Nam Nhanhdự đoán xổ số 3 miềndò vé sốdu doan xo so hom nayket qua xo xoket qua xo so.vntrúng thưởng xo sokq xoso trực tiếpket qua xskqxs 247số miền nams0x0 mienbacxosobamien hôm naysố đẹp hôm naysố đẹp trực tuyếnnuôi số đẹpxo so hom quaxoso ketquaxstruc tiep hom nayxổ số kiến thiết trực tiếpxổ số kq hôm nayso xo kq trực tuyenkết quả xổ số miền bắc trực tiếpxo so miền namxổ số miền nam trực tiếptrực tiếp xổ số hôm nayket wa xsKQ XOSOxoso onlinexo so truc tiep hom nayxsttso mien bac trong ngàyKQXS3Msố so mien bacdu doan xo so onlinedu doan cau loxổ số kenokqxs vnKQXOSOKQXS hôm naytrực tiếp kết quả xổ số ba miềncap lo dep nhat hom naysoi cầu chuẩn hôm nayso ket qua xo soXem kết quả xổ số nhanh nhấtSX3MIENXSMB chủ nhậtKQXSMNkết quả mở giải trực tuyếnGiờ vàng chốt số OnlineĐánh Đề Con Gìdò số miền namdò vé số hôm nayso mo so debach thủ lô đẹp nhất hôm naycầu đề hôm naykết quả xổ số kiến thiết toàn quốccau dep 88xsmb rong bach kimket qua xs 2023dự đoán xổ số hàng ngàyBạch thủ đề miền BắcSoi Cầu MB thần tàisoi cau vip 247soi cầu tốtsoi cầu miễn phísoi cau mb vipxsmb hom nayxs vietlottxsmn hôm naycầu lô đẹpthống kê lô kép xổ số miền Bắcquay thử xsmnxổ số thần tàiQuay thử XSMTxổ số chiều nayxo so mien nam hom nayweb đánh lô đề trực tuyến uy tínKQXS hôm nayxsmb ngày hôm nayXSMT chủ nhậtxổ số Power 6/55KQXS A trúng roycao thủ chốt sốbảng xổ số đặc biệtsoi cầu 247 vipsoi cầu wap 666Soi cầu miễn phí 888 VIPSoi Cau Chuan MBđộc thủ desố miền bắcthần tài cho sốKết quả xổ số thần tàiXem trực tiếp xổ sốXIN SỐ THẦN TÀI THỔ ĐỊACầu lô số đẹplô đẹp vip 24hsoi cầu miễn phí 888xổ số kiến thiết chiều nayXSMN thứ 7 hàng tuầnKết quả Xổ số Hồ Chí Minhnhà cái xổ số Việt NamXổ Số Đại PhátXổ số mới nhất Hôm Nayso xo mb hom nayxxmb88quay thu mbXo so Minh ChinhXS Minh Ngọc trực tiếp hôm nayXSMN 88XSTDxs than taixổ số UY TIN NHẤTxs vietlott 88SOI CẦU SIÊU CHUẨNSoiCauVietlô đẹp hôm nay vipket qua so xo hom naykqxsmb 30 ngàydự đoán xổ số 3 miềnSoi cầu 3 càng chuẩn xácbạch thủ lônuoi lo chuanbắt lô chuẩn theo ngàykq xo-solô 3 càngnuôi lô đề siêu vipcầu Lô Xiên XSMBđề về bao nhiêuSoi cầu x3xổ số kiến thiết ngày hôm nayquay thử xsmttruc tiep kết quả sxmntrực tiếp miền bắckết quả xổ số chấm vnbảng xs đặc biệt năm 2023soi cau xsmbxổ số hà nội hôm naysxmtxsmt hôm nayxs truc tiep mbketqua xo so onlinekqxs onlinexo số hôm nayXS3MTin xs hôm nayxsmn thu2XSMN hom nayxổ số miền bắc trực tiếp hôm naySO XOxsmbsxmn hôm nay188betlink188 xo sosoi cầu vip 88lô tô việtsoi lô việtXS247xs ba miềnchốt lô đẹp nhất hôm naychốt số xsmbCHƠI LÔ TÔsoi cau mn hom naychốt lô chuẩndu doan sxmtdự đoán xổ số onlinerồng bạch kim chốt 3 càng miễn phí hôm naythống kê lô gan miền bắcdàn đề lôCầu Kèo Đặc Biệtchốt cầu may mắnkết quả xổ số miền bắc hômSoi cầu vàng 777thẻ bài onlinedu doan mn 888soi cầu miền nam vipsoi cầu mt vipdàn de hôm nay7 cao thủ chốt sốsoi cau mien phi 7777 cao thủ chốt số nức tiếng3 càng miền bắcrồng bạch kim 777dàn de bất bạion newsddxsmn188betw88w88789bettf88sin88suvipsunwintf88five8812betsv88vn88Top 10 nhà cái uy tínsky88iwinlucky88nhacaisin88oxbetm88vn88w88789betiwinf8betrio66rio66lucky88oxbetvn88188bet789betMay-88five88one88sin88bk88xbetoxbetMU88188BETSV88RIO66ONBET88188betM88M88SV88Jun-68Jun-88one88iwinv9betw388OXBETw388w388onbetonbetonbetonbet88onbet88onbet88onbet88onbetonbetonbetonbetqh88mu88Nhà cái uy tínpog79vp777vp777vipbetvipbetuk88uk88typhu88typhu88tk88tk88sm66sm66me88me888live8live8livesm66me88win798livesm66me88win79pog79pog79vp777vp777uk88uk88tk88tk88luck8luck8kingbet86kingbet86k188k188hr99hr99123b8xbetvnvipbetsv66zbettaisunwin-vntyphu88vn138vwinvwinvi68ee881xbetrio66zbetvn138i9betvipfi88clubcf68onbet88ee88typhu88onbetonbetkhuyenmai12bet-moblie12betmoblietaimienphi247vi68clupcf68clupvipbeti9betqh88onb123onbefsoi cầunổ hũbắn cáđá gàđá gàgame bàicasinosoi cầuxóc đĩagame bàigiải mã giấc mơbầu cuaslot gamecasinonổ hủdàn đềBắn cácasinodàn đềnổ hũtài xỉuslot gamecasinobắn cáđá gàgame bàithể thaogame bàisoi cầukqsssoi cầucờ tướngbắn cágame bàixóc đĩa百家乐AG百家乐AG真人AG真人爱游戏华体会华体会im体育kok体育开云体育开云体育开云体育乐鱼体育乐鱼体育欧宝体育ob体育亚博体育亚博体育亚博体育亚博体育亚博体育亚博体育开云体育开云体育棋牌棋牌沙巴体育买球平台新葡京娱乐开云体育mu88qh88