5 Mistakes Franchisees Make When Looking For Commercial Property

Avoid these common mistakes to ensure your next real estate decision is the right one.

21, 2021

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As a franchisee, one of the biggest decisions you need to make is finding the right property for your business. Successful franchisees are constantly looking for ways to scale and gain new locations. Everyone heard the cliché – Location, location, location as for property. These are supposedly the three most important factors when buying property. The truth is that your business location is just one of many factors a franchise owner should consider when looking for real estate. Other than that, the location of your company is important. So don't forget about these common mistakes franchisees encounter while searching for the perfect property.

1. History can repeat itself

The history of a location can be very insightful and extremely helpful in choosing a property. For example, if you are looking for a new location for your pizzeria and come across a lot 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 perfect, five other pizzerias failed in the same spot. This information doesn't necessarily mean yours are going to fail, but it definitely warrants a deeper investigation into this location before making a decision.

Similar: 10 things to consider when choosing a location for your business

2. Size matters

Another mistake many franchisees make when looking for real estate is to misjudge the size of the location they need to run their business. Bigger isn't necessarily better. Every penny counts when building a business. It is therefore important to make the right decisions when making an acquisition. Just because you get the deal of a lifetime in a property doesn't mean it is the right choice. Sometimes you can find properties with a high cost per square meter, so there is a tendency to take advantage of the price and get bigger. This can be a great opportunity or it can be an unnecessary decision. Make sure to do your due diligence and keep your numbers on any properties you come across. No matter how good the business looks on paper, when you buy a property with more square feet than you actually need, the extra space needs to be converted into profitable space. If not, it's not really a deal for “your” business.

3. Build versus Buy

The larger the company, the more options you have to scale and expand your franchise locations. When deciding whether to build a new site or buy an existing one, it is important to check your numbers. On the surface, building a new site might be the more expensive route, but that's not always the case. There are many instances where the workload of converting an existing structure into what you need for your franchise location far exceeds what it would take to simply build it. Some franchises have a very specific blueprint to follow; that can limit your real estate options. Make sure that the cost per square meter of finishing required is no more than the cost per square meter of the full build. In some areas, these two numbers can be very similar, which actually allows you more flexibility in choosing your property and location options. This can be helpful when you are forced to follow a specific blueprint or real estate policy for your franchise.

Related: How Much Does It Cost to Build a Restaurant (Infographic)

4. Brand identity is important

You need to choose a property that allows you to present a cohesive and recognizable image. Not all companies need the same branding style, however. For example, if you are a large chain restaurant franchisee, it is imperative that the property you choose is recognizable to that established brand. Many large franchisees provide franchisees with an overview of building specifications, rules, and possibly even approved locations for real estate. But smaller franchisees should also follow these guidelines and make sure they have a recognizable vision for their business in all locations. This means that even if your particular franchise allows for different types of property, you need to ensure that the locations you choose allow the appropriate signage or color scheme to be used to showcase your brand identity.

5. Marketing Matters

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 fantastic area and still fail in that business location. This is what happens when you put too much focus on the property and too little on marketing. The property you choose is extremely important, but it is complemented by the marketing you do for your business and its locations. No matter what real estate decision you've made, you'll need to come up with a marketing plan for that location. As a real estate coach, as soon as you have decided on your franchise location, I recommend that you immediately start working on a marketing plan. This way, while you are preparing the new property for your business, you are also preparing the area for your arrival and creating a presence for your new franchise location.

Related: 4 Social Media Marketing Trends You Should Implement In Your Strategy For 2021


There are many factors that play a role in choosing the perfect property for your business and franchise locations. But as with any business decision, data and information are king. Make sure you have a business plan in place before you start looking for real estate. A good business plan will give you the information, and possibly even the specifications, that you need in choosing the perfect property for your franchise location.

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