FINAL WORD
Multi-award winners Anthony Stahl and Daniel Mesiti have been Boost Juice franchises for 15 years and now operate five stores in Sydney and one Tommy Guns Barbershop outlet.
Franchisees share secrets to location success.
The location of your business is critical and will greatly determine the success or failure of your business, so you must be diligent spending time researching your location. Consider the following factors.
DEMOGRAPHICS What are the demographics and socio-economic influences in the area? Is your business suited to the type of customer in the area; are they your target market and would they purchase from your business? Our Boost Juice Bar at Manly highlighted this as we expected Manly to be a location that complemented the brand – but as it turned out, the demographics of the area proved the store was not viable.
TYPE OF TRAFFIC FLOW Is your business a destination (like Bunnings) or does it need to be in the flow of traffic where convenience is important? Also, be careful when assessing traffic flow. Locations near transport hubs can be misleading as there may appear to be lots of people passing your location, but will they actually stop? Also consider how the weather will affect this. Rain usually drives people indoors. Does the site do better on weekends or weekdays and how does this affect your business?
WEATHER EXPOSURE Is your business seasonal? If your business is busier in summer (like Boost,) are the customers around during that time or does the area vacate during the holidays (like some CBD sites)? We thought our first Boost Juice Bar was a cracker of a site but the area vacated for six weeks over Christmas and summer when we were ready to pump.
COMMERCIALS Negotiate well. Your occupancy costs go one way only (and that’s up) so be comfortable with the details of your lease and know how much it will be in five years and the impact this will have on your profitability. General lease terms are five to seven years. Generally speaking your occupancy costs should not exceed 8–14 per cent of your turnover (though this is very dependent on industry), so do your homework and ensure the promo levies, outgoings, airconditioning, taxes and duties, and land tax are all included in your calculations. Also, is a fitout contribution included? Some shopping centres will offer a substantial contribution to your fitout costs and things like Category 1 works can become expensive very quickly. Category 1 works will include things like core drilling, range hoods, grease traps and airconditioning ducting.
COMPETITION Where are your competitors and what sites have they chosen? Is there an advantage their sites have over yours in terms of their location and traffic flow? Your competition can be a good yardstick for how your business might perform. Will the area be able to sustain the same product or service that you are offering?
ADJACENT BUSINESSES Often, having complementary businesses in your area can help drive your demographic into your store. Also consider what precinct your site is in. Is it the fashion, food or service precinct for example?
Another factor may be seasonal or recurring activities the local council or centres put on such as food markets. These will have an impact on your trade if pop-up stores appear every week offering similar products. STORE PRESENTATION AND LAYOUT
COMPETITION Will the space allow you to configure your store the way you want it? What are your size and storage requirements? Do you need a large shopfront to showcase your product, or can a smaller shopfront work?
FINAL THOUGHTS Negotiating a lease is one of the hardest things a franchisee will have to do. It can become a very emotional experience, so work hard at maintaining objectivity. Try to consider both sides of the negotiation. Competition for the site will impact your ability to negotiate and this is just as important at the lease renewal. It is not uncommon to engage professionals within franchising to help negotiate but this doesn’t negate the need for you to be very informed and constructively involved in the process. You will bear the outcomes.