Franchising Today - Summer 2016 - 18

Column by Brian Bern and Samantha Berk

Corporate-owned retailers are outbidding
small franchise groups on many high-priced
new development opportunities.

CHANGING LANDSCAPE
FRANCHISEES MUST BE PREPARED TO NAVIGATE A VASTLY DIFFERENT REAL ESTATE MARKET THAN
THEY DID 12 OR 18 MONTHS AGO.

LACK
OF
SPACE,
EVER-INCREASING
Lack of
space,
ever-increasing
recession. Now, the best locations
rental rates and increased competition from corporate tenants and new
concepts are squeezing franchisees
out of prime locations. But franchisees can navigate these critical stages
of the real estate cycle by acting fast,
demonstrating value and negotiating
smart terms.
As late as 2014, franchisees had
many more site choices, as the country continued to recover from the
18

franchising-today.com

SUMMER 2016

at class A and B properties are all but
gone, leaving either less-attractive
sites or expensive infill redevelopments. Franchise groups exploring
new developments are finding higher
costs, as developers pass on increased
land and construction costs down to
tenants. These conditions have put
rents above where they stood before
the downturn.
Regardless of the concept, it is

often hard to justify paying these
high rents, and for franchisees, it is
especially difficult. A large, corporate-backed restaurant might be able
to float a location with unreasonably
high occupancy costs, but a franchisee typically cannot.
Franchisees are finding themselves
in greater competition for space.
Quick-service restaurants, haircut
concepts, cell phone stores and others are continuing to push into top


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Table of Contents for the Digital Edition of Franchising Today - Summer 2016

Contents
Franchising Today - Summer 2016 - Cover1
Franchising Today - Summer 2016 - Cover2
Franchising Today - Summer 2016 - 1
Franchising Today - Summer 2016 - Contents
Franchising Today - Summer 2016 - 3
Franchising Today - Summer 2016 - 4
Franchising Today - Summer 2016 - 5
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Franchising Today - Summer 2016 - 38
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Franchising Today - Summer 2016 - 40
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Franchising Today - Summer 2016 - Cover3
Franchising Today - Summer 2016 - Cover4
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http://www.nxtbook.com/nxtbooks/knighthouse/ft_2019_vol4issue4a
http://www.nxtbook.com/nxtbooks/knighthouse/ft_2019_vol4issue3
http://www.nxtbook.com/nxtbooks/knighthouse/ft_2019_vol4issue3b
http://www.nxtbook.com/nxtbooks/knighthouse/ft_2019_vol4issue3a
http://www.nxtbook.com/nxtbooks/knighthouse/ft_2019_vol4issue2
http://www.nxtbook.com/nxtbooks/knighthouse/ft_2019_vol4issue2b
http://www.nxtbook.com/nxtbooks/knighthouse/ft_2019_vol4issue2a
http://www.nxtbook.com/nxtbooks/knighthouse/ft_2019_vol4issue1
http://www.nxtbook.com/nxtbooks/knighthouse/ft_2019_vol4issue1a
http://www.nxtbook.com/nxtbooks/knighthouse/ft_2018_vol3issue4
http://www.nxtbook.com/nxtbooks/knighthouse/ft_2018_vol3issue3
http://www.nxtbook.com/nxtbooks/knighthouse/ft_2018_vol3issue2
http://www.nxtbook.com/nxtbooks/knighthouse/ft_2018_vol3issue1
http://www.nxtbook.com/nxtbooks/knighthouse/ft_2017winter
http://www.nxtbook.com/nxtbooks/knighthouse/ft_2017fall
http://www.nxtbook.com/nxtbooks/knighthouse/ft_2017summer
http://www.nxtbook.com/nxtbooks/knighthouse/ft_2017spring
http://www.nxtbook.com/nxtbooks/knighthouse/ft_2016winter
http://www.nxtbook.com/nxtbooks/knighthouse/ft_2016fall
http://www.nxtbook.com/nxtbooks/knighthouse/ft_2016summer
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