Friday, June 28, 2013

Franchise Tenants are Leasing Opportunities

Choose your franchise tenants well.

When it comes to leasing commercial and retail property today, a franchise tenant can be a recipe for success when it comes to the overall tenancy mix and property performance.

Well-chosen franchise tenants can boost the trade for the property and therefore underpin the market rental for the landlord.  This will have a direct flow through effect to the other tenants within the mix and the clusters of tenants in and around the property.

There are many franchise tenants and types across the office, retail, and industrial property marketplace.  That being said, they all have special and unique circumstances of property occupation.  They all require understanding.  If you are working with landlords in the leasing of vacant premises, you would be well advised to connect with the local franchise groups to understand their occupancy needs.

In the case of leasing brokers and agents, it can also be said that commercial and retail real estate leasing fees can be significantly enhanced over time by working with franchise groups with their multiple occupancy requirements.  It is a matter of understanding the property requirements of the franchise group in each case.

So here are some tips that can apply to the leasing process with these high value tenants:

  1. Understand the tenants and the franchise brands that currently exist in your town or city.  You may find some other franchise groups of a similar type that will like to compete with those that are already in occupancy and trading.
  2. Check out the competing properties in the local area and most particularly the shopping centres.  You will get many leasing ideas from the relative tenancy mix and the franchise groups in each case.
  3. Directly contact the national and regional franchise groups to understand their leasing and occupancy needs in your town or city.  They will have certain leasing requirements, rental structures, locational issues, and property requirements in each case.  They will also have some standard lease documentation that will be used in the case of any new lease negotiation and occupancy.  Take the time to understand their requirements, so that you can introduce the correct franchise brand to the properties that you manage or lease.
  4. When it comes to negotiating a lease with a franchise tenant, it is quite likely that they will have a standard lease document that they will provide to the landlord.  On that basis you will need to work with the landlord to refine and structure the lease to suit the property and the landlord’s requirements.

It is a well-known fact that franchises are proven brands and on that basis will be a business opportunity when it comes to successfully filling a vacant tenancy in the properties you have listed.  Find the right properties to suit the local franchise groups.  Over time you can have multiple leasing transactions from the same franchise group.
The landlords that you serve will in most cases be achieving a stable tenancy with a well-known brand.  That can strengthen the trading opportunities for other tenants within the property.

You can get more tips on franchise tenants in our newsletter for commercial real estate brokers.