Case Study: Negotiating Leases for franchised Caci Clinics
Negotiating Leases for franchise clinic rollouts
If you have walked down the “High” street, chances are that you have walked past a Caci Clinic. Caci are passionate about delivering life changing “Skin Confidence”. Caci started in 1994 in Newmarket and over the past 25 years have grown to 60 plus franchised clinics. Caci are on a mission to expand its franchise clinics and make it more affordable for its franchisees to start their own Caci Clinic.
Concerned that Caci was leaving too much money on the table with its lease negotiations for new sites, Marcus and Proactive Property Group were brought on to source sites, and to negotiate leases for 20 new clinics throughout New Zealand.
Marcus worked closely with the Caci Franchise Team to source the best possible sites for new clinics and to negotiate leases to achieve market leading commercial terms. This reduced both the entry costs and the ongoing lease costs for franchisees in their new clinics.
Marcus engaged with Caci from the beginning to understand its site requirements, its desired locations and its business model. This enabled Marcus to develop comprehensive site briefs and tailored commercial lease terms that suited Caci’s business.
Marcus then took to the market and identified potential sites within the desired locations. The identified sites were qualified and shortlisted with Caci.
Once a site was shortlisted or identified as suitable for a clinic, Marcus would engage with the agent or landlord to negotiate commercial lease terms.
This is where the benefit of Marcus’ experience and previous perspectives as a Landlord and as a Tenant came into play.
Based on his expertise and knowledge of the legal, property, and financial issues encountered during the lease cycle (entry into the lease, occupancy during the lease, exit on expiry) Marcus was able to tailor the commercial lease terms for Caci to:
- reduce the entry costs;
- lock in the financial benefits during the lease term; and
- ensure there were no fish hooks on lease expiry.
The Client Outcome:
Proactive Property Group sourced sites and negotiated leases for 20 new Caci Clinics in the first half of 2021.
This was done by working closely with the Caci Franchise Team and its franchisees and by engaging with agents and landlords to negotiate and agree commercial terms.
Some of the lease transactions that Marcus negotiated involved:
- achieving market leading commercial terms that were more favourable than Caci’s neighbours in tightly held areas;
- achieving fitout concessions to reduce the franchisees costs to fitout their clinics;
- reducing or eliminating franchisees personal guarantees;
- de-risking the lease transaction by imposing milestone conditions or opt out options;
- Eliminating the potential for competitor co-location;
- Building in cost free fitout periods and rent free start up periods;
- Ensuring visibility and signage for the premises;
As Marcus’ relationship with the Caci Franchise Team and its franchisees grew, Marcus has assisted on:
- Designing and obtaining building consent for clinic fitout
- Advising franchisees on landlord maintenance obligations
- Managing a clinic defit
Overall, Caci has been able to accelerate its clinic rollout throughout New Zealand and get more franchisees into clinics on market leading commercial terms.
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