Location: Rent buys traffic. Don't settle for a quaint spot with low rent because too few people will find you.
Quality trumps location but location multiplies the benefits of quality.
Why is an existing shop for sale? Is it profitable? Is the location strong? Are the books accurate? Get the books AND the tax filings to examine myth and reality.
Hold on Mike, I didn't say that location isn't everything. It most certainly is. What I was saying is not to discount an expensive location. Because an expensive location may be worth the risk because of the potential return on investment. Like the Washington DC location above, at $6500/mo, it was worth the risk because our calculations for revenue were exceeding $750K per year.
Learning to identify prime spots gets easier the more you do your research. Just get out there, observe, read, call the For Rent signs to see what the landlords are charging, meet the business owners, ask them the going rates - after a while, you'll have a good idea of what space should go for in particular neighborhoods. Add to that census data, traffic flow data and demographics and you'll be better prepared.