6 Leasing Tips for Franchisee Tenants
Readers of our book, Negotiating Commercial Leases & Renewals FOR DUMMIES will
learn, in-part, that there is much more to commercial leasing than meets the eye!
Before you even think of searching for commercial property to lease for your
first franchised business or another location to expand your operations,
consider the following tips to help you get a better lease deal:
to Win: Negotiating to win must be the tenant’s goal. Why?
Because that’s the goal of the landlord, the landlord’s property agents, and
the landlord’s real estate agents. The landlord is not necessarily looking for
a “win-win” leasing deal. Remember, a typical landlord charges the tenants as
much rent as possible and who would expect anything less? Consider these points when negotiating to
win: lowest possible rental rate, largest tenant allowance, lowest deposit, and
most signage and best parking.
all Lease Terms at Once: Don’t look at your lease as a list
of individual points that must be negotiated separately. All those business
terms are connected and must be negotiated collectively. For example, don’t
agree to the rental rate until you’ve agreed to the length of the lease term.
Telegraph Your Intentions or Give Buying Signals:
A good football quarterback can take the snap from centre, fake the handoff to
his running back, and then pass the ball to an open receiver – all without
telegraphing his called play. As a tenant moving in or looking for another franchised
location, try not to speak in terms such as, “When I move in …” or “I would
like the carpet replaced …”. These are called buying signals and they always
serve to weaken your bargaining position. Don’t let what you say and the words
you choose work against you.
Nothing and Get It In Writing: Tenants make all kinds
of assumptions regarding their leases – sometimes blindly or because of poor
negotiations with the landlord or their real estate agent. Unless a point
appears in writing on the accepted lease, don’t assume it’s part of the deal.
Yourself by Incorporating: Regrettably, franchised businesses
can – and do – fail. Incorporating can protect you. Remember that if you allow
the landlord to put your personal name on the lease as the tenant (or even the
letter of intent or offer to lease), then you will become personally
responsible for rent payments and all other terms of the lease agreement. If
you make the tenant a corporation, then generally the tenant corporation is on
the hook and not you, personally.
Change the Day Your Rent is Due: For many small business owners, the end of the month is not a pleasant time. Staff payroll and rent are due and loan payments may need to be made. Sometimes having even a few days’ grace to make the monthly rent payment can make a world of difference if your business has decent cash flow. By negotiating to change the day your rent is due (perhaps the fifth or tenth day of the month) with your landlord, you can breathe a little easier at month’s end. Approaching your landlord or property manager and explaining this are your first steps. Many landlords will understand your predicament and may grant your request – even if you’re in the middle of a lease term. If the landlord agrees, make sure your get a proper one-page lease-amending agreement which will state this agreement – or an e-mail acceptance, at the very minimum.
For a complimentary copy of our CD, Leasing Do’s & Don’ts for Franchisee Tenants, please e-mail JeffGrandfield@TheLeaseCoach.com.
Dale Willerton and Jeff Grandfield - The Lease Coach are Commercial Lease Consultants who ; while 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 visit www.TheLeaseCoach.com