With inflation 8.2% higher in September 2022 than September 2021 the cost for everything has risen, forcing franchisees to get creative when launching new units. One of the best ways a franchisee can cut opening costs is to opt for a conversion instead of a new build.

A conversion is simply converting a space used by a prior business, ideally a restaurant, to the location for your new franchise. According to Fransmart CEO a conversion can cut build-out costs by up to 50% and speed up your time to opening. All Fransmart’s brands allow conversions, giving their franchisees a chance to conserve startup cash and open new locations in stronger financial positions.

The recently opened Taffer’s Tavern in Washington D.C. in a prime location next to Capitol One arena was a conversion of Penn Commons, another tavern style restaurant. Rise Southern Biscuits & Righteous Chicken Florida franchisee, Don Schnurr, found his dream location in Winter Park in a spot that was formally occupied by a mattress store.

The market is ripe to find a conversion location. According to Datassentials, 10% of restaurants closed permanently during the pandemic, which was just shy of 79,000 restaurants. Even in 2022, this shuttered real estate is still easy to find.

While space isn’t difficult to find, what do you need to consider when looking at a possible conversion space for your new franchise location?

What was in the space before?

The type of business in the space prior could be a big advantage, especially if you’re looking to open a restaurant. If the prior tenant was also a restaurant the infrastructure for a commercial kitchen (if your concept requires one) is likely in place. Additionally, equipment like walk-in refrigerators or hoods might already be there.

Not having to alter the HVAC system is a big savings. This is what drew Curry Up Now franchisees in Atlanta to their third location. The franchisees transformed a former Indian restaurant to Curry Up Now, which specializes in Indian fusion cuisine in just three weeks. The location had the HVAC system in place, as well as a walk-in, hood and grease trap. The team simply had to bring the equipment up to their standard, add additional equipment and the restaurant was ready to open quickly and at substantial cost savings.

What is the condition of the building and space?

While you can save money with a conversion, you must do your due diligence. If there are infrastructure issues with the building-plumbing, electric, HVAC, then what appears to be a deal can quickly turn into a money pit. Have a professional inspect the space before signing any lease.

Is it the right building?

When assessing any potential location you not only want to inspect the HVAC and electrical system to be certain they can support your needs, but also make sure the space has adequate ADA compliant restrooms, is the right size for your concept, is in a visible location with plenty of parking and is easy to access from the road.

Do your Research

Once you found a space you like make sure it is zoned for a restaurant and that there are no active violations against the building and that it is current on all its permits. You’ll also want to make sure that it is in compliance with current building codes and if it is in compliance with the Department of Health.

If there was a restaurant there prior, you’ll want to find out why it failed. Look at the demographics of the local area to make sure that they match the demographics of your concept.

With the amount of conversion space available today, it’s an option any savvy franchise owner will want to consider. Fransmart’s brand portfolio is conversion friendly, and our team can help you in finding the right franchise and right space.

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