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Conclusion

Real estate can make you a lot of money or be an anchor around your financial neck. Most franchise companies constantly reevaluate their real estate requirements and strategies. The consequences of poor decisions are simply too dramatic. Some of the elements included in the best-in-class franchise real estate strategies are standardized formats, standard lease and ownership policies, and standardized requirements for location and site selection. Additional elements include a centralized real estate department, sharpened analysis of sites and markets, planned exit strategies, and performance measures and incentives. An overwhelming majority of franchisors use performance measures to ensure that sites are opened on time and within budget. However, incentives need to be linked to ongoing performance of the site after it is opened. There is no authoritative in-depth analysis regarding the extent of real estate investment in franchising. However, with over 600,000 outlets in the United States alone, and most of those outlets situated on prime retail real estate, one could estimate franchise real estate holdings at about one half trillion dollars. Pay attention to the real estate or fail.


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