Not all franchises are premises based and those that are, often do not require retail premises. If a franchise requires a franchisee to have commercial office premises there is a large stock of such premises that are available and franchisees normally do not need any assistance from their franchisor.
In a retail franchise the right premises may be difficult to find and, of course, the franchisor knows or ought to know what works in terms of premises for its particular franchise so very often franchisors do get involved in the process so as to make sure that franchisees do not make a mistake. For those franchisors that are involved in selecting premises then very often they have nominated architects, shop fitters, builders and property lawyers that they either recommend or require franchisees to use. Franchisors should certainly make the process as simple as possible and that also usually involves using the franchisor’s commercial agents to find, or to assist in finding, the premises for the franchise business.
Sometimes franchisors go even further and take a lease of the premises in their own name and then grant a sub-lease to franchisees. Often franchisees are newly incorporated businesses who simply don’t have a sufficient track record to satisfy landlords of prestige premises that they would be good for the rent and in those circumstances franchisors may have to step in. Having said that, this practice is becoming less common because franchisors generally do not want to be landlords.
Written by: John Pratt
Partner, Hamilton Pratt