How to terminate a franchise agreement
Although a franchisor will give you the tools,...
Considering that the average franchisee tenant stays in the same location for at least ten years, it’s easy to calculate mathematically the total rent that you may pay to the landlord over that time period. This is often more than you have paid as a franchise fee, for a house or for anything else. This is part of the reason that we have developed such a grave respect for rent. On a monthly basis, your rent may not seem like such a big purchase; however, most franchisee tenants aren’t leasing space monthly, but for a 5-, 7- or 10-year term. The economy can crash and rebound in an entire lease cycle or term. How The Lease Coach helps franchisee tenants is by having a long-term vision.
The following steps are among the many we take to help get the franchisee tenant the best rental rate possible:
We know that gathering information is the first step of the preparation process when getting ready to negotiate a lease. However, information provided to us by a tenant who signed their lease several years ago may not reflect reality today. We will gather rental rate information from as many locations and sources as we can before and during the negotiation process. One of the most effective methods we employ is by talking with other neighboring tenants and asking them about their rental rates. We don’t just stop there but also check rental rates in surrounding properties too – not just the ones we are dealing on.
We understand that the rental rates from one property to another can vary dramatically based on different factors: location, visibility, accessibility, traffic flow and so on. When The Lease Coach does site selection for a franchisee tenant, we don’t necessarily look for the cheapest property, we look for the property where the franchisee tenant can achieve the highest volume of sales relative to ultimately making the most actual profit.
Does commercial real estate ever go on sale? Yes and no. We remember a piece of commercial property near one of our homes came down about 10 percent, or $100,000, in price. There are deals to be had and reasons for those deals; a landlord may be running out of uses and may realize that the last couple of units in the property need a reduced rental rate because they already have the top 25 industries or uses in place.
We focus on asking what if questions as these are best for exploring unforeseen circumstances. We often ask, “What if the anchor tenant in the plaza moves out?”, “What if the landlord loses the building in foreclosure and how will affect the tenants?”, “What if an aging parent requires a tenant to stay at home and help to provide care?”.
When The Lease Coach represents franchisee tenants in leasing matters, we routinely negotiate with more than one landlord at exactly the same time. Doing this is permissible, ethical, advisable and smart! We have perfected this process and actually created bidding wars between several landlords simultaneously for a franchisee tenant’s tenancy. Remember that you are the customer … why not make multiple landlords pursue you? Remember that the landlord can take multiple offers to lease on the same site from various agents and collect a deposit from each one. We work to fight fire with fire.