Franchising: how to assess premises for your first franchisees

A business that works at its existing premises will not necessarily work in any location. Before offering your concept to other entrepreneurs, you need to understand which features of the space make success possible. Within a franchise network, assessing premises against shared criteria helps avoid unsuitable openings and decisions driven purely by enthusiasm. The aim is not to find the perfect property, but to identify suitable premises before making costly commitments.

1. Turn your existing premises into measurable criteria

Start with your own business, but do not make every feature of its premises a requirement for franchisees. A large stockroom might be essential for replenishing stock, or it might simply reflect what was available in the original property. A central location might attract customers, but it could also conceal inefficiencies offset by exceptionally high footfall.

For each feature, ask what purpose it serves and what evidence demonstrates its value. Then draw up an assessment checklist with three categories:

• Essential requirements: without these, the service cannot be delivered properly or work organised effectively.
• Preferred features: these improve the customer experience or efficiency, but alternatives are acceptable.
• Adaptable elements: these can change without compromising the identity of the franchise concept.

Consider usable floor area, internal layout, access, visibility, storage, deliveries, building services and the scope for installing equipment. Avoid size thresholds based on habit: link each requirement to a specific function.

For example, if the service involves private appointments, the ability to separate reception and consultation areas may matter more than the width of the shopfront. Documenting this relationship allows you to assess different properties consistently.

2. Look at demand, not just footfall

Premises in a busy area are not automatically suitable. What matters is whether the right customers for your offering are present at times when they can buy. Site visits should therefore examine the relationship between the location, customer habits and how the service is delivered.

Use a repeatable approach to recording observations: the days and times of visits, accessibility on foot and by different forms of transport, parking options, neighbouring businesses, obstructions to visibility and how easy it is to find the entrance. Distinguish what you have observed directly from statements made by the landlord or agent.

If the business operates by appointment, focus on ease of access and convenience. If it relies on impulse purchases, observe the routes pedestrians actually take: being on a busy road does not mean being on their walking route.

Compare prospective premises using the same checklist. You can use qualitative ratings, provided each assessment has a clear rationale. A positive overall score must not outweigh the absence of an essential requirement. Also keep the commercial suitability of the location separate from any territorial exclusivity: they address different questions.

3. Check the true cost of making the premises suitable

Rent is only one part of the decision. An apparently affordable property may need work that wipes out the saving or delays opening.

Before giving final approval, request a technical assessment and sufficiently detailed quotations to distinguish between:

• work needed to make the premises usable;
• alterations required by the franchise concept;
• optional improvements;
• recurring property-related expenses;
• costs incurred during building work and preparations for opening.

Compare properties on the basis of what it will take to make them usable, rather than comparing one that is ready to occupy with another whose required works have not yet been costed. Also clarify which works are the landlord’s responsibility and which the franchisee must pay for.

The financial assessment here answers a specific question: how much will it cost to make these particular premises suitable for the franchise concept? It does not replace the business’s financial plan or justify promises about turnover.

Before entering into binding commitments on the property, ask a professional to assess suitable contractual arrangements for managing outstanding checks, works schedules and the availability of the premises.

4. Formalise approval, limitations and responsibilities

In Italy, franchising is governed by Law No. 129 of 6 May 2004, on commercial franchising. The agreement must be in writing to be legally valid. Article 4 also requires the prospective franchisee to receive a complete copy of the agreement and the prescribed annexes at least thirty days before signing, subject to the exceptions set out in the law.

If the franchisor is to approve the premises, make the procedure, scope and consequences of that approval clear in the contractual documentation. Commercial approval does not replace technical, planning or administrative checks, nor does it guarantee profitability.

Assign responsibility for each check and retain a final written record listing the documents reviewed, any conditions still to be met and the reasons for the decision. If the layout changes or further work becomes necessary, review the approval rather than assuming it remains valid.

In practice: before looking for premises for your first franchisees, prepare a standard checklist, define the non-negotiable requirements and establish who has authority to approve. The decision must rest on documented checks, not simply on impressions from a site visit.