FRANCHISE ADVICE
planning to operate your own business, does this affect you? Well, it's a good time to take on board lessons from industry and how markets are adapting to the current circumstances. If, for instance, you were to find yourself in such a position, rather than ignoring the rent and service charge demands sent by landlords, we would recommend that you be transparent about your financial position. Ideally explain to your landlord what effect the crisis has had on your business and what steps you have taken to mitigate the loss of income. In the case of coronavirus, these could be putting staff on furlough or receiving any grants or loans to keep the business going. The landlord is more likely to cut a deal on the rent if they know they are dealing with a responsible tenant and a business that is more likely to emerge from a crisis than go under. Their aim, in most cases, should be to keep you trading in their building. Sharing information such as a financial forecast and sales data can show the landlord where their assistance can make the difference, to reopening the business or staying closed permanently. The aim of the relationship going forward should be one of sharing and mutual risk. This said, the tenant should have a clear goal of what is required from the landlords to help keep the business viable. This may well go beyond just rent abatements and also include complete lease re-gearing, especially if there are lease events on the horizon such as a rent review or the end of a tenant’s lease. In addition, shopping-centre tenants should be looking to put pressure on the landlords to see what steps they are taking to attract high-quality and quantity footfall back into their centres. The door may now also be open to discussion on turnover-only rents and shorter leases. The days of upward-only rent reviews and 25-year lease terms already seem like they belong to another era. How
"Franchising offers aspiring business owners a level of comfort from national brand recognition to often reducing some of their operating risk"
flexible a landlord will be in negotiations will depend largely on the pressures they themselves are under from their lenders and shareholders. The premises-based franchise
business can perform a significant role in the rapidly transforming shops marketplace. There will undoubtedly be opportunities for many ambitious franchise brands looking to expand and break into those high streets and those shopping centre locations where previously they would have found rents too high to operate profitably. The franchise model offers many aspiring business owners a level of comfort from national brand recognition to often reducing some of their operating risk. This can be attractive to a prospective landlord and hopefully together with a strong property team behind them could help to grow the brand nationally in locations
that have always been out of reach. The winners in the emerging retail
landscape will be those keeping pace with changing consumer trends; offering a direct and engaging customer experience. They must make the purchasing process simple and easy and offer the customer a safe environment in which to shop. Adding sustainability to their business model, and clearly defined social responsibility, will help the business attract those shoppers who still, understandably, crave the incomparable physical experience after three months of lockdown and online retail.
DAVID BROOKS is senior partner of Retail Group London, a property consultancy whose clients include Wok&Go, easycoffee and 9Round
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