By Frank Deluca
After contemplating becoming your own boss, making pilgrimages to seasonal franchise shows and mulling over piles of glossy brochures from franchisors, you are ready to take the plunge and become a fast-food restaurant franchisee. Regardless of whether your business will serve pizzas, burgers, fried chicken or wraps, you will face many of the same challenges as other restaurateurs. One of the most important of these is real estate.
Location, location, location
You will probably look at numerous possible locations for setting up your new business. Some of the largest restaurant franchisors have their own in-house real estate departments that can handle all site selections and lease negotiations, but in most cases, you as the new franchisee will need to undertake these tasks yourself. So, it is important to be well-prepared.
The franchisor will likely help you narrow down a preliminary list of sites that will meet your needs with regard to traffic counts and brand exposure. This is beneficial, since even when you are handling site selection yourself, the franchisor’s approval will be required.
Beyond such external factors, it is important to see if a space can accommodate your fast-food business needs in a cost-effective manner. To do so will require professional consultants to produce a set of detailed designs, including architectural, mechanical and electrical drawings. You should not skimp on this phase, since anything that gets missed now will cost you in the long run.
In the case of a renovation project, especially, insist on a site walkthrough with professional advisors—such as your architect, general contractor or commercial building envelope consultant—before firming up your lease. Even when leasing a newly built space, do not simply assume everything will be in place to meet the unique needs of your restaurant. Be sure to check ceiling heights, support column locations, hall widths and other facets of the design.
It is easy to take important issues for granted. I remember how one restaurant franchisor negotiated a reasonable lease rate on behalf of a franchisee for an attractive space, but with one condition from the landlord: that the franchisee would have to accept the space from the landlord ‘as is.’ Everything seemed fantastic at first, but upon looking deeper—notably, beyond the drawings produced by the franchisor’s own design consultant, which must not have involved a thorough site inspection—it became clear there was no gas being run to the leased space. Imagine the franchisee’s surprise, given he required gas for his fryers and other cooking equipment.
You might well wonder how the franchisor would set up a restaurant lease with a space ill-equipped for a restaurant, but it was simply because no one had bothered to ask about gas lines and so the space was indeed accepted ‘as is.’ Consequently, the franchisee had to spend an additional $10,000 to run a gas line into his leased unit.