Buying triple net lease (NNN) properties is definitely a good way to build wealth through real estate. It generates a steady stream of long-term passive income while requiring only minimal effort on the part of the owner.
However, to make sure you are getting the best returns from such an investment, you should only go for NNN properties with creditworthy tenants, such as PDQ.
In this article, we will guide you through finding and purchasing PDQ triple net leasing opportunities that best suit your requirements.
PDQ: A Quick Look into the Business
PDQ is a company that has been making a splash in the casual foodservice industry in the US since it opened its first restaurant in 2011. With a name standing for “Pretty Darn Quick” and “People Dedicated to Quality”, the company sells favorite fast-food items, from batter-fried chicken tenders and sandwiches to milkshakes and salads.
Generally speaking, PDQ real estate for sale is sold to investors as ground leases or NNN properties, which means it leaves you with no landlord responsibilities. Their restaurants typically feature a huge building (usually measuring from 3,000 to 4,000 square feet) that is situated on a 1-acre lot.
Since its first opening, the company has grown to 56 restaurants in 10 states across the country (all of which are situated in premier locations with high volumes of traffic) and is currently planning to add more.
PDQ Franchise Requirements
As with any other franchise business, PDQ would evaluate your net worth before they consider you as a qualified franchisee. Then, they would require you to pay an initial fee to operate a store under their trademark. These are on top of other fees, such as the start-up fee, royalty fee, and subscription fees for the tools and software that the company might be using.
Aside from the fees, you and your people might also be required to undergo some training that will be facilitated by the company to get your PDQ restaurant franchise up and running. This ensures all your processes and services meet the benchmarks set by PDQ for its outlets.
As for the lease terms, it is usually 15 to 20 years, with 10% increases every five years.
To get an exact idea of the PDQ franchise requirements, you can visit their website or call them directly to gather more information that you need.
PDQ Franchise Cost
The PDQ franchise cost would depend on certain factors, such as the location. But to give you a general idea, the typical PDQ NNN price can run from around $1,000,000 to around $4,000,000. However, they plan to trim the usual cost for future locations that you may acquire.
And, as previously implied, this is not the only cost required to open and run a PDQ restaurant. There will be additional expenses for the start-up fee, royalty, and subscriptions.
Essential Factors to Consider in a PDQ Property to Buy
While PDQ triple net leasing opportunities come with a high potential to generate positive returns, there are things that you still need to consider to ensure you are purchasing the most ideal franchise for your bottom line.
First and foremost, you have to sort out your finances to acquire a franchise from the company. While they might offer you some financing solutions, you could also opt for an independent lender, which is a more practical strategy for most investors.
Once you understand just how much capital you need to get started, you can then search for franchising loan options with the lowest interest rates. This helps you save more on expenses and increase your profit margins down the road.
Similar to most types of business, the location of the PDQ outlet you are buying will have a significant influence on its profitability.
Typically, you should consider buying a location that is highly visible to passers-by and close to other anchor stores, as these establishments will help attract more customers to your business.
Other location elements that you have to look into are:
- Population density – the more people in a location, the more prospective customers you will have.
- Demographic data – if there are a lot of people working and living in the immediate premises, your restaurant will also enjoy high business potential.
- Accessibility – your restaurant should be easily accessible even for those who are driving.
- Traffic volume – a location that sees a high volume of traffic throughout the day will ensure you can hit your revenue targets.
Of course, you would want to purchase a property in a location with a growing market. Better yet, you should invest in a place with a booming foodservice industry.
Capitalization rate (cap rate) is a ratio that gives you a good idea of how much you will earn from your investment. Generally speaking, a high cap rate is beneficial to franchisees, as it means you will be paying less for the property. It also means that it will be quicker for you to get your return on investment.
To calculate the cap rate of a potential property, you can use this simple formula:
Cap Rate = Net Operating Income (NOI) / Purchase Price
As for PDQ, its restaurants usually have an average cap rate of 5.33%, making it a great option for NNN investment.
When you finally find a location to buy, you should not forget to request a franchise disclosure document (FDD). This contains some essential information that you need to know about the franchise before finalizing your decision, including:
- An outline of the fees that you have to pay to the franchisor
- The amount that you have to invest to get your business started
- Your obligations as a franchisee
- The assistance that you will receive to get your business off the ground, such as training, marketing, and business tools
- Patents and copyrights
- Financial statements
- A copy of the franchise agreement that you will sign with the franchiser
Make sure to read this document carefully before you sign the contract and hand over your money to PDQ.
Given the current performance of PDQ restaurants, it is easy to presuppose that the company will experience explosive growth in the course of time. And, as a franchisee, you would also likely see great opportunities ahead of you in this ever-lucrative food service sector.
But still, you need to ensure that are in for the best PDQ triple net leasing opportunities available today. So, take the time to do research on the prospective outlets, seek advice from NNN advisers, and do other due diligence to come up with the best decision. With the information provided in this article, you should be off to a good start in finding a PDQ NNN property that offers the highest value for money.
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