This article appeared in Issue 3#3 (March/April 2009) of Business Franchise Australia & New Zealand
When starting out with a new franchise, one of the most important elements in determining your future success is selecting the right premises. While the rent or purchase price may be very attractive, you are simply wasting your money and efforts if the space you have selected is not suitable for your business.
So, how do you know what the right premises for your franchise is? Firstly, take a look at the industry in which your business operates. Fast food and other eateries rely a lot on passing trade, so if your premises is tucked away down a little side alley, out of the main pedestrian or traffic thoroughfare, your location will force your business to depend on heavy advertising and marketing spend and repeat business. On the other hand, if you are a solicitor or accountant, it’s perfectly acceptable your office is in a quieter street. Parking space availability will be more of a concern.
Before you start on the hunt for your ideal franchise premises, it’s important to understand exactly what you are looking for. Make a list of the “must haves” and the “would likes.” As discussed, this depends on the nature of your business, and the types of things you may consider are the number of parking spaces, shop frontage, size of the premises, kitchen/bathroom facilities, etc. In some cases, you may have to negotiate on some of the items on your list, so it’s important to have a clear idea on what you are and are not prepared and able to do without.
The next important factor to consider early on is the area or suburb in which you would like your premises to be based. This may be where you have already been operating and therefore have an established clientele, or perhaps is in an area where you have identified a need for your goods/services. In some areas, there are notably fewer openings, so unless you are prepared to wait for a very long time for premises to become available, you may have to be a little flexible. While you may desperately want to be on the main street in your area, consider moving your business into a side street and operating from there, perhaps until there is another opening on the main street or elsewhere more preferable.
It is crucial that you have consulted with your mortgage broker or bank to determine what exactly you are able to spend on your new premises (rent or loan). Obviously, the more you have to spend, the greater choice you will have; however, it will save a lot of time in the long run if you begin your search with a very clear figure in mind. This will also prevent you from overcommitting and jeopardising the survival of your business.
Remember to consult with your franchisor during the process discussed above, because often there will be some contractual requirements as to the area your business needs to be located, as well as the type of premises and its fittings and amenities you need to have.
Once you have discussed the above factors with your bank, your franchisor, your business partner/s and anyone else who is involved in the decision-making, then its time to begin searching for your premises.
There are a number of ways to go about sourcing available premises to rent/buy. Firstly, the internet is a great tool to find out what’s out there. A number of property search sites such as www.realcommercial.com.au and www.harcourts.com.au allow you to narrow your search to area and price range, as well as giving you the details of the Sales Consultant and office managing the sale/lease of the premises. Listings are updated daily, so be sure to keep going back to the sites to see if these is anything new.
Take a drive around the area you would like to be based. Premises for lease or for sale will usually have a board in the window, with the details of the office managing its sale/lease. If you are not very familiar with the area, this is a good way to get to know the various streets and better locations to be based, so that if you do see a listing online, you will know exactly where it is without having to go there.
The interesting change we are seeing in the Australian commercial market in recent times is that it is becoming more and more difficult to source commercial property, offices and shops alike. Even in the current global economic conditions, independent property valuers and commercial sales consultants alike, in all corners of Australia, are reporting back on the limited vacancy rates of quality commercial property. Demand is rising accordingly, and it seems that new commercial developments are not keeping pace.
With this sombre reality in mind, I would strongly suggest that business owners seeking commercial premises to either rent or buy actually go above and beyond simply searching online and in advertisements for stock that is listed. The reason this won’t work is that the most desirable commercial property is being snapped up before it is even marketed for sale or for lease.
So, how to stay ahead of the pack? I would recommend that the astute business owner takes the time to meet with the commercial real estate office in the area in which they would like their business to be based (many residential real estate businesses also look after commercial listings). Set aside around 30 minutes to sit down with the Sales Consultant and go through the list you prepared, containing information on what elements your ideal business premises should contain, the area and the price range.
The Sales Consultant will then attempt to match your wish list with what he/she already has listed, or will take down your details for when they do get a listing that meets your requirements. Good Sales Consultants have a very loyal, expansive and current database, so will know in advance if anyone on their database is planning to list their property. They may also let their database know that they have a serious buyer, which could lead to all kinds of opportunities that may not otherwise have been available to you.
Therefore, the best advice in this market where commercial property is very tightly held, then, is to keep your eyes and ears open, and to form strong relationships with the commercial Sales Consultants in your desired area/s. Check in regularly with them, and let them know if any of your plans change (for example, if you are able to spend slightly more, or are willing to look elsewhere.)
Usually, the most successful businesses that stay ahead of their competitors have very cleverly selected and sourced their premises.
Mike Green has over 20 years of experience in the real estate industry. He is the former owner of Harcourts franchise, Mike Green Real Estate Ltd (Auckland). As Managing Director of Harcourts International since December 1999, Mike is responsible for the overall operation and direction of Harcourts’ group of companies, and with Paul Wright, is one of two owners of Harcourts International Ltd.