Step 1: Find the Right Representative/Agent
Whether you decide to purchase or lease, it is key to find the right agent to represent you. Contact the agent of your choice and identify what you are looking for and your location area.
(TIP) Use the Agent: If you already know of locations in your area, provide that information to the agent as it may speed up the process. Just as when you buy a home, the agent is paid by the owner/landlord. As such, it is important to have an agent that represents you. Use your agent to research your area and provide demographic information, maps and zoning information. Locate facilities such as colleges, universities, factories, shopping centers, and offices that will aid your sales. Don’t forget to analyze Saturday and Sunday traffic as well.
(TIP) Characteristics: Look for locations that have as many of the following characteristics as possible:
- High foot traffic
- Corner location
- High visibility for both store front and exterior signs (short distance to street)
- High traffic count
- Population-gathering areas such as nearby college/university, high-rise office building(s), dense residential area or high traffic commercial area
- Readily accessible parking
- Area with high personal income level
- High energy level
(TIP) General Feel: Location is a difficult thing and many of the things are mentioned above although none of these things are a guarantee of success. The main thing to remember is that Ice Cream is a product that we have found is benefited by what is around. Ice Cream is not a planned item to purchase but an impulse item. So it is important to be around a mass of other businesses that generate the traffic. The general thought is:
- Make sure your location is on not on the way to where people are going but at the location people are going. For example people go to other restaurants and entertainment. The street with high traffic and speed are on the way to somewhere else.
- Our product is unique and will create it’s own sense of destination although you can say that being the destination will generate only that amount of volume. If you are the destination you get only that business. If you’re in a location where other things are happening you get the destination traffic that your store generates PLUS the traffic that is generated by the other venues.
(TIP) Do your research and read. One of the articles listed at the International Franchise Association site is written by Dale Willerton who advises people on site location.
Step 2: Start the Buy/Lease Process
This step begins with a Letter of Intent (LOI) which either you or the landlord will initiate. Real Estate Terminology can vary greatly from region to region. We recommend that you familiarize yourself with the terms used in your area. If you have questions regarding any information, ask your local Realtor. The LOI outlines the major points of the buy/lease contract. Always include the requirements of the SZIC standard lease form. When you have come to an agreement on the points of the LOI, the buy/lease contract will be written by the landlord using the agreed-upon points.
(TIP) To understand the location’s ability to be profitable, work up an estimated break even point for the store using the financial information contained in the LOI and other cost information you have gathered (your Area Developer can be a resource in securing this financial information) Use this form as a tool for determining your “break even” point.
(TIP) Once you have determined that this is the location for you and the landlord is preparing the buy/lease agreement, you need to have your architect complete a store layout and submit to SZIC for review per the requirements found in Store Design & Layout. This will save time in the approval process.
Step 3: Buy/Lease Execution
After the lease has been negotiated and all changes have been made as agreed, you and the landlord will execute the lease. A copy is then to be forwarded to SZIC.
(TIP) It is your responsibility to ensure that the lease document properly reflects your understanding of the terms of the lease. Carefully review all documents and/or have your lawyer review before signing your name. DO NOT take possession of the premises prior to complete execution of the Master Lease.
Step 4: Lease Negotiation
Review the following article to see how to negotiate a lease. How to Negotiate a Lease
Please incorporate Sub Zero’s Lease Rider Agreement into your negotiated contract with the landlord. Lease Agreement Rider
Step 4a: Use of Letters of Interest to Negotiate Terms
The Core-Four Lease Negotiation Process
Key Issues In Franchise Lease Agreements
The Core-Four Lease Negotiation Process
It should be known that Letters of Interest are used to ask for what ever you want; so ask for it. Be specific and general all at the same time. One main thing to remember is to not accept the initial terms offered. Ask for the world and then take what you can get.
(TIP) Multiple Locations: Never negotiate on one location. If you work on one location; you become limited by that option only. It is also easy to get emotionally attached to “A” location not work objectively. We recommend that you work on negotiating 3 locations at a time. There are many benefits in negotiating to have multiple locations. Two of said benefits are:
- You can use the other 2 locations negotiations against the others.
- You don’t get attached to one location and can evaluate the benefits.
Examples of Letters of Intent: