Multi-Unit Franchisee Magazine Issue I, 2014 | Page 81
the door, landing a lease that leads to
long-term success takes not only due
diligence and attention to the fine print,
but also the ability to balance the dual
roles of franchisee and tenant, says attorney Amy Cheng, a partner with Cheng
Cohen in Chicago.
“As a multi-unit franchisee, you are
kind of in the middle,” she says. “You have
to negotiate the lease with the landlord
to protect yourself, and yet you have to
get the franchisor’s approval. Communicating with both parties is essential
for making sure things go smoothly.”
Cheng, who works with franchisors
and has negotiated deals for multi-unit
franchisees, says complications arise when
a franchisee brings a franchisor—and
the franchise agreement terms—to the
table too late, resulting in a three-party
negotiation.
“Multi-unit franchisees often don’t
think about the requirements of franchisors and getting the landlord to understand how important those requirements
are up front,” she says. “If you have a
good franchisee and a good location, it
is always my hope that lease negotiations
are not what kills the deal.”
The art of leasing
The level of support franchisors provide
varies widely by system, size, industry,
and the individual needs of franchisees,
says Jim McKenna, president of McKenna Associates, a franchise consultant
in Milton, Mass., and founder of The
Franchise Real Estate Institute. To take
advantage of a brand’s real estate expertise,
he says, franchisees should take the time
to learn what assistance their franchisor
offers and speak with other franchisees
to find out if the system delivers.
When it comes to learning the ropes
of site selection and lease negotiation,
most larger franchisors can be invaluable in helping franchisees find the best
available site. Smaller systems, with fewer
resources and connections, may offer
training and guidelines to identify sites
and to educate new franchisees on the
required lease language and brand’s site
selection requirements.
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