How do you negotiate with landlords and lenders in a higher-cost environment?

Negotiation strategies

A well-maintained restaurant in a strong location gives franchisees a better chance of long-term success. However, getting a good facility in a prime spot also comes at a price, and those costs continue to increase. Franchise Update asked several multi-unit franchises how they negotiate with landlords or lenders when opening a new restaurant.

While individual strategies differ, several franchisees said the relationships they have developed with these groups over the years remain one of their greatest assets. Like many other negotiations, these talks involve give and take and should lead to an outcome that is beneficial for all. Several operators say they emphasize the excitement and value their restaurant will bring to a community when speaking with landlords.

While enthusiasm matters, franchisees should back it up with financial data and operating costs so everyone is working from the same information. Everyone wants the best deal, but successful negotiations leave both sides in a position to succeed. Now that we are in July and coming off the Independence Day holiday, many people are taking time over the summer to go on vacation.

Franchisee insights

Soo Heu Company: Heu Hawaii LLC Brands: 2 Capriotti’s Sandwich Shop Years in Franchising: 3 In a higher-cost environment, I focus on negotiating three key areas: base rent, percentage rent, and tenant improvement allowances. For base rent, I work to secure a rate that allows the business to operate successfully over the long term, often negotiating a target rent per square foot that is appropriate for the market and projected sales volume. I also negotiate a percentage rent provision so that the landlord shares in the success of the business while keeping occupancy costs manageable.

Tenant Improvement Allowance (TIA) is equally important, especially in Hawaii, where construction costs can be high. I seek TIA contributions that help offset build-out expenses and improve the project's overall financial viability. Pushpak Patel Company: Mitra QSR Brands: 173 KFC and Taco Bell Years in Franchising: 18 The first thing I do is make sure everyone is working from the same set of facts.

Whether it is a landlord, a lender, a brand partner, or a vendor, the conversation gets easier the moment both sides understand the economics, the risks, and the long-term opportunity in the same way. When the other party does not have to guess your intent, you spend your time solving the problem instead of testing each other. In a higher-cost environment, I focus on sustainability over negotiation.

A deal only works if it is successful for everyone over the long term. With landlords, that can mean talking honestly about occupancy costs, lease structure, or performance-based rent. With lenders, it means open communication, sharing information early, and working through a challenge together before it becomes a problem.

Relationships matter as much as terms. We have worked with many of our lenders, landlords, and partners for years, and the trust you build in good times is what carries you through the harder ones. Successful negotiations are rarely about winning.

They are about finding a structure where everyone can succeed. Approach it as a partnership instead of a transaction, and you usually get a better outcome that lasts. Victor Miltiades Company: Home-Grown Industries of Georgia, Inc.

Brands: 3 Mellow Mushroom Years in Franchising: 26 Preparation is critical. I approach negotiations with detailed financial data, a clear understanding of market conditions, and a long-term perspective. Mellow Mushroom locations are often viewed as community destinations, so I emphasize the value we bring as a stable tenant and local business.

Whether working with landlords or lenders, I focus on building relationships and finding solutions that support both parties over the long term. Brent Weaver Company: BWR Enterprises, Inc. Brands: 3 East Coast Wings + Grill Years in Franchising: 21 My wife, Sherry, and I were the very first franchisees for the brand, which meant we had the full attention of the leadership team.

Sam Ballas, the founder of East Coast Wings + Grill, helped us secure a location in a very hands-on way. We also worked with a local bank so close to our store that the bankers would come in for lunch. That kind of personal relationship made a real difference in negotiating and getting everything up and running.

Matthew Keiser Company: Paxton Keiser Enterprises Brands: 22 Taco John’s, 1 Nothing Bundt Cake Years in Franchising: 8 Taco John’s has been around for 57 years and has a strong track record of generating excitement when entering new communities, which is an important advantage when engaging potential landlords and lenders. We emphasize the value our presence brings to surrounding businesses while building trusted relationships with landlords and lenders. As experienced multi-unit franchisees, our proven ability to successfully operate Taco John’s restaurants adds an extra layer of confidence for partners considering our concept.

Franchisee Bytes When and where was your last vacation? I visited London and Berlin at the end of 2025. *-Wade Oney, President, Bam-Bam Pizza Inc.

, 96 Papa Johns, 8 Qdoba, 8 Starbucks* Aruba in spring 2025. -Matt Davis, President, The Davis Restaurant Group dba the Honey Baked Ham Co., 22 Honey Baked Ham **The Bahamas for Thanksgiving in 2025.

I’m a big fan of The Atlantis.** -Joey Pierson, CEO & CFO, Tacala Companies, 381 Taco Bell, 38 7 Brew **I took a trip back to South Africa to visit family in March 2025. It was great to reconnect with my roots.

** -Lawrence Kouri, Multi-Unit Owner-Operator, 22 Dave’s Hot Chicken Grand Cayman in May 2025. -Mike Kulp, CEO, KBP Brands, 828 KFC, 119 Arby’s, 85 Sonic, 56 Taco Bell **St. John with my son and his family in the summer of 2025.

** -Tamra Kennedy, Franchise Operator, Twin City T.J.’s, 6 Taco John’s **London to celebrate my daughter’s first birthday in December 2024.