Construction build-outs tend to be the largest startup cost for new franchise owners. With so much at stake, it is critical to stick to the budget and make sure that everything goes off without a hitch. That’s why we have created this guide to help both parties get a greater understanding of what their responsibilities are throughout the process.
In this blog, we examine the costs and work that go into construction build-outs for franchises. We explore the topic from both the end of the franchisor and the franchisee to determine the best options for a successful launch.
Who Pays for a Franchise Build-Out?
A franchisor wants their franchisee to be prepared to succeed in business, regardless of the type of business they represent. As such, it may be tempting to step in and provide as much support as possible. Doing this can be expensive, however, and is not required by a franchisor.
The build out of a franchisee’s location generally falls on them, in addition to site selection. The franchisor provides guidance around what costs they can expect to incur during construction, what equipment, furnishings, and other instructions are required to fall within the guidelines of operation.
That being said, this rule is not set in stone. Plenty of franchisors go about providing build outs to their franchisees, especially when it comes to things like brand specific equipment or furnishings. That’s why often, franchisors will use preferred vendors to assist in the process of setting up a franchise.
What Costs Should a Franchise Owner Expect with Their Build-Out?
Location
When it comes to running a successful franchise, location is critical. Yet positioning your business in the trendiest part of town isn’t the only factor that will determine success. When looking at a place, you need to consider the existing layout. Should you be looking to lease, or to buy? Should you pick a vacant space, or a place with existing infrastructure that can be leveraged? What is the condition of the building itself?
It’s worth spending the extra time on site evaluation to make sure you’re getting the best value for the property you’re looking at. After all, doing so can save you a lot of time and money moving forward. If a space you’re interested in doesn’t have all the components you’re looking for, don’t forget to bring that up in lease negotiations to try to get an increased tenant improvement allotment from your landlord!
Fixtures and Build-Out
Franchisors will usually help franchisees estimate the build-out costs for a new business. Working off of a template, they should already have a deep understanding of what is required going into the process.
Unfortunately, the costs of a build-out can vary pretty widely depending on the type of service being provided, so there’s no way to get an understanding without discussing this with the franchisor directly. A restaurant’s fixtures are likely to be more expensive than a retail store, and will require more detailed maintenance over time.
Franchisors may have specific guidelines or vendors that provide furnishings for your business. Ultimately, however, the decision generally comes down to the franchisee to determine what steps are taken during the construction phase of a franchise build-out.
Professional Fees
Other start-up costs for a franchise build-out may include fees for zoning compliance, contractors, décor, security deposits, insurance, landscaping, and civil and architectural drawings. These fees can vary dramatically from location to location – an urban location is likely to be more expensive overall, yet might have significantly less to consider regarding landscaping costs.
Conclusions
Entering into a franchise can be an exciting period filled with potential, but doing so is a considerable investment in both time and money. That’s why its so important to find contractors that are reliable and trustworthy that are able to guide you throughout the process.
At Buildout Pros, we specialize in buildouts ranging from retail to medical spaces, meaning that we have the expertise to follow up on even the most demanding franchise buildouts. We will help ensure that you are getting the best value for your dollar, and can help guide you throughout the process so you’re not going over budget.
When opening a franchise, the construction costs are going to be the most expensive part of opening your business. Don’t make the mistake of choosing contractors that aren’t sensitive to your finances. Contact us today to learn more about how we help franchisors and franchisees alike in building out the business of their dreams!
Email: info@buildoutpros.com