Commercial Real Estate
What You Should Know About Commercial Investing and Franchises
By Buyincomeproperty.com
Nov 7, 2005, 20:23

Commercial real estate investing is a wide area and there are many people today making profitable commercial real estate deals all the time. Whether you’re buying commercial real estate with the intention of putting it back on the market as it, or searching for commercial real estate investing opportunities with the intention of opening a business, you need to know about real estate. And if your commercial real estate investment includes a franchise, you need to take time to learn a little about franchises in general and about your franchise in particular.

One of the first steps in this type of commercial real estate investing is to find out the condition and stability of the franchise as a whole. You can do this by asking for recording from the franchise company and by talking to other franchise owners. Remember that a commercial real estate investment of this kind means that your business is a part of a larger entity. If that larger company fails, your commercial real estate investment will also likely fail.

If the larger company seems reluctant to not share the requested information, beware. While you as the owner of a single franchise store and a single commercial real estate investment do not have the right to the records of the other store owners, you do have a right to many of the records of the franchise.

Another point to carefully consider before you make this commercial real estate investment is whether you want to deal with a large franchise or a smaller one. There are benefits to each. With a larger company, you’re going to have more support to help make your commercial real estate investment profitable. From payroll to help with hiring, the parent company can often give advice, provide services and even lend on-site aid. The smaller franchise probably won’t offer those services, but that means that you’ll likely have more say in your commercial real estate investment.

There’s really no such thing as a standard franchise contract. The terms and conditions are provided on an individual basis, from one franchise investor to another. Some franchisors offer the same deal to every commercial real estate investment situation while others allow room for negotiation.

Look for franchise companies that have a highly recognizable logo, trademark or service to make the most of your commercial real estate investment. Keep in mind that your personal success is directly connected to the success of the franchisor. The better known the company, the more likely you are to begin making an instant profit.

It’s also a good idea to find out about the rules of the franchise before you make this commercial real estate investment. For example, some franchises require the owner or manager to be on site a specific number of hours each week. If you’re looking for a commercial real estate investment opportunity that doesn’t require your attention, this many not be your answer. Even some of the minor details – all employees must wear name tags or managers must attend continuing education training – could be the determining factors in whether you should take this step.

Your credit rating is certainly going to impact your ability to take out a commercial real estate investment loan, but you may find that lenders are more lenient when it comes to franchises. There are several reasons, including the fact that you have an established trademark, logo or service behind you. If this is something that people generally recognize, the lender is likely to feel that you’re a step ahead of starting a business from the ground floor. Advances against future payment, loans from the franchise itself for down payments, discounts or other aid in the building process, and help acquiring items to stock your business may also smooth the loan process.