Franchisee´s Guide to Restaurant and Retail Store Site Selection and Development

By: Clay Reichert - PE, ICSC Certified Development, Design and Construction Professional Contributor to RHF and Principal www.retaildesignpro.com

 

So you just found the greatest franchise opportunity in the world. Now what? You just need a place to build your store. That should be easy enough, right?? Just find a real estate agent and tell them what you want and Bam!-problem solved! Not so fast... Selecting an excellent site to build a restaurant or retail store is absolutely critical to the success of your business. If you make a poor decision in selecting a site, it could dramatically impact your startup cost.

Real estate site selection for a new store or restaurant is much more complex than selecting a place to build a home or buying an existing building. As the old real estate adage goes... Location, Location, Location is of paramount importance. If you are working with an experienced real estate development manager of a large national franchise company, this person will be a critical resource to successful development of your store. Good franchisors have an interest in your success and will help you from making a site selection mistake, but the ultimate responsibility for site selection success lies with you.

You will need a diverse team of real estate development professionals to aid in your success.

A buyer´s agent will work for you to find sites that meet the general location, size and price criteria. You need to clearly communicate with them the site´s criteria. They get paid a commission (typically by the seller) when the real estate is purchased.

If available, the franchisor´s real estate development manager will be thoroughly familiar with the trade area restrictions, demographic requirements, traffic count requirements and will typically perform a simplified market study based on this data to aid in predicting the store location´s viability. If there is no real estate development manager available, you will need to hire a retail market researcher to perform a market study on your behalf.

You will need to find a civil engineering and surveying firm thoroughly familiar with retail site development to perform many critical functions. First, the civil engineer will assist you with performing site/environmental due diligence for prospective store locations. Numerous issues such as driveway access, wetlands, buffers, zoning restrictions, impervious area restrictions, sewer availability, soil suitability, site contamination, building setback lines and moratoriums can lead to a property being unacceptable for your building. Assuming that the due diligence performed is acceptable, a boundary survey will need to be performed to ensure that the property´s size is what is claimed by the seller and to show the easements that affect the property (the lender will probably require this). The surveyor will also perform a topographic and utility survey for use by the civil engineer who designs the site. The civil engineer will work with you and the franchisor´s real estate development manager in order to design a site development plan that meets your needs and gains the government approvals and permits needed for developing the property. The site development plans will include details such as driveway, parking and building locations, storm drainage, sewer service, water service, grading and landscape design.

A local real estate attorney will be needed to perform the necessary title research to issue a title report to you, the surveyor and the lender and possibly to rezone the property and/or obtain variances.

An architect will need to be retained in order to design a building for your business. Even if the franchisor has prototype building plans, an architect will still need to review these and make the modifications required for the particular site and to meet the local government´s requirements. It is important to select an architect who specializes in retail/restaurant building design.

Although you may decide to perform the role of construction manager yourself, it is recommended to hire a professional specializing in retail store or restaurant construction management to review the designs for cost effectiveness, prepare construction budgets, bid out the construction documents for site development and building construction, assist you in selecting the appropriate contractors and manage the construction.

Even though real estate development is probably not why you decided to become a franchisee, it can become a major part of your life and may take many months or possibly a year or more from selecting a property until you are open for business. The best advice is to hire highly experienced professionals with a proven track record. With real estate development professionals, being penny-wise and pound foolish can be a very costly mistake.