10 Steps to Opening a Franchise

In this Blog Post, I’m going to share with you the 10 Steps to Opening a Franchise.

Opening up a franchise or any small business can be daunting. There are hundreds of tasks that need to be completed most, within a certain time-frame. Risk increases with ignorance and to that end, its important to understand the big picture, the context of the entire sales and development processes. In this article I’ve outlined a high level overview of the how to open a franchise unit. Its important to note that this post is intended to be a road-map. The specific how-to’s for each task will be covered in a separate posts.

With just a few exceptions, this process can be used to open any small business.

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Get Your Permits Faster

Within the Development Process there are three phases that give timing experts a great deal of heartburn: site selection, lease execution, and permitting. These particular phases of the process present variables that can be difficult to schedule against because they depend on elements you cannot control.

Site selection, or the availability thereof, is a function of the market. If we’re in a sellers’ market, then demand is high, supply is low. This makes it harder to find good real estate. The harder it is to find, the longer the site search.

The push to get a lease executed can also be a long road. The road is certainly shortened if you have a detailed (but not too detailed) LOI, but from a timing perspective, you’re at the mercy of the Landlord or signatory. If the decision maker or his attorney decide to go on vacation for a week during your lease negotiation, you’ll have to wait a week for him/her to return.

The third variable is permitting. By the time you get to the permitting phase, you may feel like you’ve been beat up by the development process, you may have some new gray hairs, or have forgotten what is like to get a good night’s sleep. Permitting can be stressful; you now have outside parties looking at your plans, sometimes demanding that you change elements of your design. I’ve lost many nights sleep over permitting deadlines, but I’ve also learned ways to mitigate the timing unknowns. Below are some ideas that will cut down the time it takes to pull your permits.

1)      Schedule a Pre-Application Meeting with the agency that will be reviewing your plans. My first interaction with the AHJ (agency having jurisdiction) usually occurs in the Due Diligence phase. I’ve already talked to these folks once, maybe twice to make sure that my proposed use is permitted in this shopping center, in this area of town, in this PUD, etc… Once my lease is out for signature, I call up these same folks and ask for an in person Pre-Application meeting. It may take a week or two to get this informal meeting scheduled. By this time, I’ve usually chosen which architecture and/or engineering firm I’d like to hire, and I ask them to attend the Pre-App with me. During the Pre-App the AHJ listens to a brief description of the project; the rest of the meeting is them telling you what you need to do to get your permit. Ask them if there are any activities you can run concurrently or if there is any special criteria about which your arch/eng should be made aware. Ask them how long it usually takes to get through permitting based on your use and their workload. And above all, be nice.

2)      Hire an Expeditor to walk your plans through the permitting department(s) for you.  Expeditors come in various forms. Some contractors can act as expeditors. Local architectural firms can also act as expeditors. Even if you are running your plans through a non-local arch firm, a local firm can take on an ‘expeditor scope’, and for a fee, be your local face. I’ve personally had a lot of success with this method. Since the AHJ already knows the local players, they are usually more apt to pick up the phone or respond faster. Local firms also know the loopholes and what obscure items can speed up the paperwork.

3)      Purchase an Expedited Review from the AHJ. This service isn’t offered by all agencies. Basically, you pay a fee to get your permit application moved to the top of the pile.

4)      Ask the Landlord for help with permitting. If the space or center you’re considering is newly built, it’s likely that the Landlord has relationships established at the City or County. Ask the Landlord to come to your Pre-App or make an introduction to the team he worked with to get his center permitted. Since the Landlord wants to collect rent from you as soon as possible, he/she will be more than willing to help you, especially if all they have to do is make a few calls.

5)      Hedge – I only recommend this measure if you are experienced in project management or if you’re up against a deadline (like paying rent before you’re open). The decision to hedge happens earlier in the development process. It puts money at risk by starting your plans before your lease is executed. If you know that permitting will take longer than you have or than you want, starting your plans before lease execution can pick up some time. Essentially you’re running the lease execution and plans generation activities concurrently. You’ll get open sooner, but because you’re starting plans before lese execution, the money that you’re spending on the plans is at risk. In other words, if the deal falls apart, you’ve lost the money you’ve spent on the architectural and/or engineering plans. Be reasonable sure that the deal is material before employing this method.

 Have you tried any of these methods? Join the conversation!