As we emphasize in our new book, Negotiating Commercial Leases
& Renewals FOR DUMMIES, the leasing process takes time to complete.
Considering the number of steps involved and negotiating time
required, your franchise store may not be open when you had planned
for; however, allowing for ample time can save you aggravation and-
more importantly – money.
Franchise tenants can begin by taking their time with the site
selection process. One common mistake that franchise tenants can
make is agreeing to terms too quickly with the real estate agent.
We routinely hear from frustrated tenants who signed too hastily
and realize that, after the fact, they may have made a mistake.
While they do good work, agents work for the commercial landlord
(rather than the franchise tenant) and they will often push a
prospective franchise tenant to lease a unit that may not be the
best choice (it may be too large or too expensive). It is of little
importance to the agent about the long-term success of the
franchise tenant – the agent’s motivation will often be a promised
commission from the landlord (and that commission will typically
increase when the tenant leases more commercial space and leases
for more years).
As a franchise tenant, you will also want to devote your time
to doing what enjoy and what is best for your business. Astute
franchisees will often realize that they cannot accomplish
everything that needs to be done, so they will hire outside
professionals to help them (e.g. a lawyer or an accountant).
Considering the amount of work involved with your own commercial
lease, it can be very worthwhile for franchisees to use a
professional lease consultant to better ensure that they get a
better – and fairer – lease deal with the landlord. For the
best results, everything that needs to be done before signing a
lease can easily take between 20 to 40 hours … will you have
this kind of time to spare?
Moving from time to timelines, scour all documents for
deadlines and note these conspicuously. It can be possible to
adjust these deadlines depending on the circumstances. You may find
that some steps are beyond your control (e.g. getting financing in
order or having a contractor inspect the commercial space) and you
will need more time to get everything in order. While you could
keep extending your condition periods by several days with your
landlord, it is often better to simply ask for a longer condition
period (perhaps 20 or 30 days) to ensure everything can be
While you may be just starting out as a new franchisee,
remember that timing will play a vital part when your lease renewal
comes due. It is not unrealistic for a franchise tenant to begin
their lease renewal process 12 – 15 months prior to their lease
expiration date. More precisely, look at your renewal-option
clause. If this says your cutoff date for exercising your
lease-renewal is six months before your lease expires, you would
need to start the renewal process six months before that – or a
total of 12 months in advance.
Remember that franchise tenants should make sure that their
lease term matches their franchise term to avoid issues later with
the lease running out too soon. This happens when the start date of
the franchise agreement is prior to the start date of the lease
agreement – which may be several months later, when the franchise
business actually opens.
Do pay attention to your own cutoff deadline and react
accordingly. While you may have intended to stay leasing in your
current location, your landlord may have other plans (your landlord
may have found a replacement tenant to take over your space and may
increase your rent dramatically to effectively nudge you to move
out and vacate the space). In this case, isn’t it better to know
this bad news ahead of time? This isn’t always the case; however,
it is something for franchise tenants to think about.
Timing can also be a factor if you don’t have a renewal option
and want to stay where you are currently leasing. If you don’t show
any interest in moving, your landlord can take advantage of this
situation (by increasing your monthly rent). And, if you wait too
long before approaching your landlord, you will have less time
available to you to move, if necessary.
For a copy of our free CD, Leasing Do’s & Don’ts for
Franchise Tenants, please e-mail your request
Dale Willerton and Jeff Grandfield - The Lease Coach are
Commercial Lease Consultants who work exclusively for tenants. Dale
and Jeff are professional speakers and co-authors of Negotiating
Commercial Leases & Renewals FOR DUMMIES (Wiley, 2013). Got a
leasing question? Need help with your new lease or renewal? Call
1-800-738-9202, e-mail DaleWillerton@TheLeaseCoach.com or