A large number of franchisees and even franchise systems attend leasing seminars. Negotiating a great, or even just a good lease or renewal, can be challenging for both franchise companies and their franchisees. When it comes to site selection, there is a jungle of real estate choices and opportunities out there that few tenants know how to maneuver.
While most franchise firms legitimately try to help their franchisees with real estate, more often than not, it's the tenant who signs the head lease and accepts responsibility for making rent payments. Tenants may go through the leasing process once or twice in their entire lifetimes. Real estate agents and landlords negotiate leases everyday for a living; they are experienced at the leasing process and are good at it.
A daily newspaper quoted me a few years ago as saying "tenants don't stand a chance negotiating leases against seasoned realtors who do it every day for a living" ... and that statement is still true today. Tenants must be prepared to negotiate aggressively. These leasing tips will help introduce a world of possibilities when negotiating a commercial or retail lease or renewal for a franchise location:
Negotiate to Win
All too frequently, franchise tenants enter into lease negotiations unprepared and do not even try winning the negotiations. It's almost as if they are applying for the privilege of paying the landlord rent money for five or 10 years. If one is not negotiating to win, one won't. With big commissions at stake, people can be sure the landlord's agent is negotiating to win and so should the franchise tenant.
Create Competition for Your Tenancy
Tenants must negotiate on multiple sites if they expect to get the best possible deal. If a franchisee falls in love with one location, they often neglect to consider alternative locations. By negotiating simultaneously on multiple sites (even if one is a favorite) one will get a better deal. This also applies to lease renewal negotiations. Most franchise tenants don't want or plan to move, but that shouldn't mean letting the landlord take advantage of the situation. Competition for tenancy is good, but one has to create it.
Be Prepared to Walk Away
Try to set aside emotions and make objective decisions. Whoever most needs to make a lease deal will give up the most concessions.
Without burning any bridges, try walking away from the deal and see if the landlord's agent comes running after. If he does, then...