Franchise real estate is a completely different discipline within the commercial real estate industry. The quality of a Franchisee location drives the entire Franchise system’s revenue and profitability for both the Franchisor and Franchisee. A deeper understanding of the Franchisor, unique location criteria, startup costs, economic model, functionality, space planning, cost estimates and special permitting requirements must be perfectly executed on each new Franchisee assignment.

Customer service is a lost art. The solo, local commercial agent methodology is ineffective and old-fashioned. A Franchisee is typically assigned to one agent who is servicing a pipeline of 8-10 other assignments, and your Franchisee is their last priority. Your Franchisee is a limited, one-time assignment to a local agent. As one of our best CEO partners said, “For 30 years, we used local brokers and for every five we used, only one actually worked out. It is too risky and is always a 50/50 hit and miss approach at best. I won’t accept calls from national real estate companies.” FGP builds a team around each Franchisee, which allows a much higher level of daily communication with expert specialists within our real estate protocol, delivering higher-quality Location Site Search and Selection, Advanced Lease Negotiation and economic results to substantially reduce startup costs and monthly rent ratios. Your Franchisees will always feel like they are the number #1 priority since they are investing their life savings in some cases. When our Franchisors and Franchisees say jump, we ask, how high?

Franchisors (with a few exceptions) find it almost impossible to predict in what city, county and state they will award their next Franchise. There may be up to 10 Franchisees utilizing a different commercial agent in each market. Each agent has a different experience level and, in almost all cases, will follow their own personal or company protocol, NOT the Franchisor’s. Due to the specialty nature of franchising, very few commercial leasing agents understand franchising as a core competency and how it relates to a Franchisor and Franchisee’s goals. Working with 10 different brokers in 10 different markets yields 10 different results.

Site Search and Selection represents the quality of the location and can make a difference of $50,000 to $400,000 in annual revenue for a Franchisee. Lease Negotiations represent a senior negotiator’s ability to manage site surveys, walkthroughs and cost estimates and understands the impact of how these negotiations will affect a Franchisee’s startup costs and monthly rent ratios. At FGP, we will not negotiate a lease unless there is complete transparency in the negotiating process. We slow down the process to make it go faster… to ensure cost estimates are completed before Letters of Intent (LOIs) are submitted. We require our Franchisees to be on the telephone when we are speaking with the landlord broker.
This transparency of first-hand communication offers our Franchisee an inside understanding of the Lease Negotiation process. When a landlord broker contacts us by telephone to ask us if our Franchisee will take less, we will not accept any offers unless they are in writing for our client to review.

Large national, regional networks all utilize commission-driven “independent contractors” known as local agents/brokers. What Franchisors need to know is that 95% of these local agents in each market earn their income from working for landlords, not serving your Franchisee’s best financial interests. Why? Because the commercial real estate companies that these agents work for have local and national landlord listing contracts to lease their space and get paid by the landlord. Franchisees are asked to pay market rental rates with the fewest number of concessions. This deep financial conflict of interest is the root cause of why Franchisees only receive 50% of the financial savings that they deserve. This results in Franchisees investing more capital than they thought they would to open their business and much higher monthly rental rates. Local agents serve the financial interests of their landlords while FGP serves the financial interest of your Franchisees.

Upon the execution of an LOI, a Franchisee is always anxious to sign the landlord lease simply because they are “so excited” or “too tired.” At this point in the process, these high emotions can cause a Franchisee to take natural shortcuts, which substantially increase the risks, pay more in legal costs, have poor legal reviews and waste an additional 4-8 weeks of precious time. FGP maintains the quality of the legal review. Best practice is within three days at an affordable, fixed rate. Any two without the other puts the Franchisee at unnecessary and grave risk.

First-time or over-confident Franchisees are at a much higher risk of costly financial mistakes the moment they sign the Franchise agreement. They are eager to get their business open in a timely manner. The construction management industry, including the process of getting four (4) cost estimates, hiring an architect and pulling permits can be a very complex and difficult process. For example, large general contractors will be 30%-40% higher than the job should cost because they have higher costs of labor (e.g., superintendents and project managers), overhead, insurance, etc. A small general contractor, who is self-performing, is on the other extreme, lacking material cost and pricing detail and, in some cases, licensing and insurance requirements, which is reflected in tempting a Franchisee with lower prices. Franchisees can easily be taken advantage of by the solicitation practices within the construction management industry.