Franchise Setup Design - Engineering and Design

The franchise business model is commonly associated with fast food restaurant chains. However, franchising has been applied in many business sectors, covering products and services alike. For example, there are commercial franchises from car rental companies, dry cleaning companies, gas stations, hotel chains and even banking institutions. However, a franchise comes with stringent requirements in all areas of business, and this includes the initial construction requirements.

• In the franchise business model, the commercial franchise (or franchisor) is the company who owns the product or service, and the franchisee acquires the rights to market that product or service.
• In other words, the franchisee agrees to assume upfront costs and share profits, in exchange for using a proven business model.
• This also means the franchisee must meet extensive requirements from the franchisor. When the premises are built, for example, they must meet both local building codes and franchise requirements.

Hiring a qualified engineering firm is recommended when starting a franchise business. Building codes are very demanding in major urban centers like New York City and Chicago, and in this case they are combined with franchisor requirements.

Commercial franchises have their own terms and conditions, but normally they charge an upfront fee and ongoing royalties. Generally, these royalties are calculated as a percentage of total sales. Franchisees can sign a single-unit agreement if they only plan to open one location, or a multi-unit agreement for several locations. Multi-unit franchise agreements can be further classified into two main types:

• Area development franchises, which grant the right to open several locations in a region.
• Master franchises, where the franchisee can offer sub-franchising in a specific region.

Unless a franchisee purchases the property in cash, there will be a monthly rent or commercial mortgage to pay. The business must also generate enough cash flow to cover utility bills, salaries and taxes, all while leaving a profit margin. However, franchisees can increase their profits with energy efficiency and water conservation. 

Among the costs involved in a franchise business, utility bills are arguably the easiest to reduce with smart engineering decisions. Royalties and taxes are percentage-based, but there are many ways to reduce utility bills:

• Implementing energy efficiency and water conservation from the design stage.
• Promoting energy and water conservation among collaborators, and even customers.
• Deploying a renewable generation system on site to reduce power bills, when the franchise requirements allow it.

Depending on the business sector of each franchise, the effectiveness of energy efficiency and water conservation measures will vary. However, some measures are effective in a wide variety of commercial spaces. For instance, energy consultants often recommend LED lighting, since the payback period is less than 3 years in many buildings. Also, consider that cooling and heating are among the highest energy expenses in commercial settings, and HVAC efficiency measures are strongly recommended for this reason.

To conserve water, a simple and effective strategy is using plumbing fixtures with the WaterSense label from the US Environmental Protection Agency. This label covers many plumbing fixture categories, and more are being added over time.

• These plumbing fixtures are tested by approved third-party labs, to validate water savings of at least 20%.
• Even greater savings are possible in franchises that use plenty of hot water, since efficient plumbing fixtures also reduce the amount of water heated.

Starting a franchise business involves a considerable upfront cost, and the franchisee must cover royalties, operating costs, and in many cases loan payments. Energy efficiency and water conservation can help reach positive cash flow, which is critical for success.

When implementing energy and water conservation in a new franchise location, any measures that conflict with the franchisor requirements must be avoided. For example, if the franchisor requires a minimum flow rate for a plumbing fixture, any water-savings fixtures below this value cannot be used.

The benefits of Building Information Modeling (BIM) extend to all areas of construction, and this includes the franchise industry. When starting a franchise, one of the main challenges is meeting all the requirements. However, when a commercial space is modeled with modern design software, key information and specifications can be added directly to components. This makes the process simpler, since construction professionals can rely on a single model for most of the information needed.

BIM is also very useful when building systems must integrate with specific equipment required by the franchisor. In a commercial kitchen, for example, BIM can help you integrate the installations required by code with the specific kitchen equipment required by the franchisor.

When the specifications provided by a franchisor use conventional 2D drawings, a professional engineering firm can also help you with CAD to REVIT conversion. Equipment dimensions and mounting details are easier to visualize in 3D, and meeting the franchise requirements becomes easier. REVIT modeling is especially useful when a franchise requires rooms and equipment with very specific features. These can be added to the model as a starting point, and all the MEP installations are then designed accordingly.

Meeting construction codes on their own is already a challenge, and the list of requirements increases when a franchisor and a landlord are involved. However, by working with qualified design engineers who use the latest design software, compliance becomes much simpler.