In my past life as a Network Development Manager with Caltex, it became obvious to me that if you did not clearly explain what you were looking for, you wasted a great deal of your time looking at rubbish. To try and filter the good location opportunities from the bad, I developed a two page Property Guideline, that I would happily send to all parties (agents, developers, land owners), who indicated they may have a potential site for us.
Published in Franchise Buyer Jan/Feb 2016
This should be the biggest question asked in selecting and opening a new business.
If the business is already operating, then the past sales are a fairly good indication for the future sales.
On the other hand, if the business is a new business, how do you estimate what your revenue is likely to be? Whether it is a large franchised brand, your own independent coffee and/or cake shop, an ice cream or yoghurt store or any other retail business, the same basic questions need to be addressed.
How do you realistically estimate the sales in dollar terms that your new business will do?
If you are joining an established franchise chain, the Franchisor may offer to provide some information, such as the demographics of the area, and maybe a listing of phone numbers of other Franchisees for you to talk to. The final word from the Franchisor is along the lines of “Do your own due diligence, as I cannot say what sales revenues you will generate” (and you will probably be asked to sign a document confirming this).
When you are about to buy a franchise you must look at the competition both from others companies, and from the franchise brand, and ask what is a reasonable distance between stores?
Competitors are normally not a great problem, and in fact, as in the case of homemaker centres and certain types of shopping centres or shopping strips, neighbouring competition can actually be an advantage.
This is what we call “clustering”. Name a reasonably sized homemaker centre/precinct, and count the bed stores, furniture outlets and electrical retailers. Experience has shown that these retail outlets actually work best together, as the combined drawing power of the homemaker centre far outweighs the advantage of being out on their own.
Published in Franchise Asia 2015
I am surprised by how many businesses decide to opt for a franchising model with no plan for how to properly achieve it. I see businesses that have tried to do it themselves, engaged a lawyer as a consultant, or just tried a shotgun approach and fired off volleys whenever they see a problem fail miserably.
Let’s start with a franchise consultant who can take an overview of the development of the franchise.
Franchise consultants are specialists who act like conductors of an orchestra, Their job is bring in (and out) the various instruments as and when required. In our case I say our business is the first violin – needed for strategic network planning, site selection policies and territory planning – and then we pass our work back to the conductor and the client to move to the next steps.
If you are buying a retail franchise you need to understand what makes a great location.
While we can list 10 or 20 drivers or factors that lead to the success of a retail business, they have different levels of importance depending on what you are selling, and how.
For example if you are selling petrol and convenience goods, your first driver is probably the numbers of cars passing the site. If you are a restaurant owner, and have a drive through as a major part of your business, this still may be your number one driver. If you have a local restaurant – sit down and wine and dine – then the area, demographics, competition and other factors will probably be more important than traffic driving past.
Before you sign up to a shopping centre site, there are some points to consider...
I was speaking with a few senior executives of some of our largest coffee and cake franchise chains over the last few weeks, and asked the open question: “How are you finding dealing with the big shopping centres at the moment?”
The common thread is that times are relatively tough, and so franchisors are having more success in negotiating new lease deals with lower rentals than probably ever before. The last thing a shopping centre needs is vacancies, and the queue of “Ma and Pa” individual businesses wanting a site has reduced greatly, so the need to fill the big shopping centres falls back onto the retail chains.
If you want to secure a site, this puts you in a far better position than two years ago. One retail chain told me how they had been prepared to walk away from some locations and actually had done so. Playing bluff with leasing agents really only works when you are prepared to close some stores, and actually do so and walk away.
Whilst the very big centres can handle this, and possibly find new tenants, the medium and smaller centres quickly start to take on a look of despair if there are more than a few vacancies on the floor.
In some states, where the law forces the registration of leases (New South Wales for example), it is possible to find out what the other tenants in the building are paying.
Published in the Franchising Magazine Mar/Apr 2013 Issue
Getting the territory right for service franchises is essential. So where should you go, and how do you know your territory is sufficient to support a business?
If you're investigating whether or not to invest in a business in the growing services sector it is inevitable that you will have questions about franchise territories.
A service franchise can focus on house maintenance, cleaning, ironing, oven cleaning, even providing a care service. Or if you like the outdoors - working in the sun, rain and wind - maybe one of these is for you: pool cleaning, dog walking and washing, building and renovating, antenna installation, roofing, paving, gardening and landscaping.
Published in Business Franchise Australia and New Zealand 2013
In today’s market, many franchise systems want to locate outside of the major shopping centres, as they want lower rents, lower rent increases and longer lease terms with options available. In addressing these sites however, you do not have the information being supplied to you such as in a Westfield’s or Centro shopping mall, so you have to base your decision more on your own research.
If we have a site in a shopping strip, it is normally referred to as an inline store. My definition of an inline store is that it is amongst other sites facing on to a road and / or footpath, adjoining the next door neighbour.
Many shopping strips are owned by independent lessors, so there is little or no group information, unless provided by a Chamber of Commerce, or a business group. I would like to pass on my views on how to evaluate inline stores if offered to you.
The location of your business can make or break you. It has a major impact on the quantity and quality of customers who come through your door, and it determines the amount of rent you pay. Choose unwisely, and there is no turning back without spending a significant amount of money. That’s why it’s vital you do your research before making a commitment, using sound criteria for location assessment based on a real understanding of your business.
Location, Location, Location……
You have all heard the adage that the most important thing in Real Estate is Location, Location, Location, and I guess retail site selection is definitely a subset of Real Estate.
You can have the greatest products, best fit out, fantastic look and still fail miserably if you have not given site selection some really hard consideration.
It continually amazes me how much effort some clients put into selecting a new store without addressing the biggest issue – WHAT DO I THINK THIS WILL SELL?
Peter Buckingham is the Managing Director of Spectrum Analysis Australia. He is a certified Management Consultant, and a Fellow of the FCA and IMC.