Why Real Estate Strategies Belong In Your Franchise Growth Playbook

Last Updated on February 9, 2023 by Morgan Beard

Franchises have a unique set of challenges on their plates. From surviving the tumult of the COVID-19 pandemic to sussing out leases and following the latest regulations, it’s hard enough to keep afranchise alive without even thinking about franchise growth.

But no matter what sphere your franchise belongs to — food service or healthcare or retail — franchise growth should be part of your business strategy. How will you maintain strength and profitability in one location while opening up another? How can you scale your brand logically and viably to achieve your business goals?

Real estate is a crucial element of a growth strategy for any franchise. While online sales and remote talent may be increasing, brick-and-mortar real estate forms the foundation for a franchise’s success. That’s why a playbook of real estate strategies can unlock sustainable business growth.

How Can Franchisees Unlock Franchise Growth Through Real Estate?

Real estate is a core part of any franchisee model: Location puts you on the map; size and convenience determine your audience; neighboring tenants and environmental factors have a knock-on effect on your brand reputation. Franchisees who take a passive approach to location are unlikely to achieve the growth strategy success they seek.

So here are some franchisee real estate strategies you could apply to your portfolio with growth in mind:

1. Build your brand via an aligned real estate strategy

Creating and committing to a strategy that aligns well with your brand and its values is important. Let what you know about your brand drive your real estate strategy and vice versa. For example, if your brand has a mom-and-pop atmosphere and small-town community values, setting up shop in a downtown skyscraper might not be a meaningful location strategy. Try to keep consistency across location choices, neighborhoods, and buildout — this way, your brand will always be recognizable to your audience.

2. Make a growth-based location strategy

Ideally, your franchise will grow from one franchisee to two, from local to regional, and ultimately national. Because scaling is so dependent on location, you will need a growth-based franchisee real estate strategy to show you which locations will be prime for your business goals. Think about where your ideal customers are located and the market competition in those places. Think about what kind of space and surroundings your brand needs to stay true to its values and tell a clear message to its audience.

3. Get your leases straight

A major part of successful growth strategies is leasing. Identifying which types of leases will be best suited to your venture and will give you the best possible growth potential should be a crucial priority task for your team. You could choose a gross lease, in which you pay a single payment and the landlord covers general building expenses, taxes, utilities, and insurance. You could choose a net lease, in which you are responsible for base rent and the various utilities in the property. You could choose a variable lease that allows the balance to shift according to variables like market conditions. And you may opt for a short-term lease over a long-term lease to test a new location before committing to it for the long haul.

By admitting and respecting the level of important real estate and location have for your franchise brand, you can start to build a playbook of growth strategies. The ideal strategies for you will be the ones that embody the values, aesthetics, and other concerns of your brand as a whole. Pairing this brand-driven thinking with practical care — working to choose the most appropriate leases for your goals, for example — will help your brand to grow sustainably.