Opening a New Franchise Location: Part 3, Construction

This is part 3 of a 6-part series on opening a new franchise business. For part 1, Finance, click here. For part 2, Real Estate & Site Selection, click here. Future installments will dig into permitting, training, and marketing.

The construction of your franchise location is when you start to see your dreams take shape and become reality. While this is an exciting time, it can also be a stressful and expensive experience, with unexpected issues and delays popping up to slow down your timeline for opening.

Before construction can begin, the single most important issue to consider is the location. The right spot for your franchise may be outside the trendiest section of town. According to Rob Branca, a Dunkin’ franchisee and president of Branded Management and Branded Realty Group, franchisees must consider issues such as ease of access for their customers and how much work is involved in making the site work. For instance, if too much excavation is required or obtaining the necessary permit is going to be an issue, the site may not be a winner.

Additionally, concerns around the economy in recent years have led to an overall slowdown in development. “The numbers get harder to work out, and that reduces a franchisee’s ability to take a risk because there’s less room for error,” Branca says. “If someone is not sure about a site, they might go ahead if interest rates are low. But with rates higher, the franchisee needs the cash flow to support their debt and still have the business work, so they might pass.”

Branca finds that the construction portion of opening a new franchise location has become more challenging than in previous years. One reason is the shortage of some types of essential construction personnel. “The availability of contractors is very compressed right now, and it has been like that for the last several years,” he says. “The pandemic made it worse, but it hasn’t rebounded since then.” He says the same issue applies to both architects and engineers.

Typically, a franchisor will expect the franchisee to spearhead the construction, although the larger the franchisor, the more likely it will give new franchisees a checklist of approved vendors. Before construction begins, it is wise to determine the level of involvement the franchisor will have in the process. Some want to approve plans and inspect them. Some build the locations and then sell or lease them to franchisees.

While franchisor involvement can be helpful, Branca cautions that this can lead to potential issues. He explains that a large franchise system may have multiple people remodeling and building simultaneously. If franchisees must use an approved vendor, they could be busy, or their prices may be higher. You will have to wait, he says, and you may not be able to open when you want.

The first time someone opens a franchise should definitely be considered a learning experience. Subsequent locations will benefit from the knowledge gained during the initial location’s construction. “Make all your mistakes early on and hopefully don’t repeat them with additional locations,” says Branca.

Finally, he urges franchisees to remember that their location will also require remodeling at some point, typically every 5 to 10 years. “Ten years is the most common for major renovation, while every 5 years is for minor changes.”

Ginny Gaylor is an award-winning writer and editor based in Greensboro, North Carolina. She has more than 25 years of experience writing on a variety of topics from home furnishings to health care, hospitality to lifestyle. She can be reached through her website, ginnygaylor.com.