Questions To Ask Before Signing A Lease
Renting a space for your franchise location is a significant commitment. Before you sign on the dotted line, make preparations for lease negotiations with the landlord by making a list of the questions you need to ask to protect yourself and your investment.
Who Are You Leasing From?
Ask who the landlord is, as their identity forms the basis of your negotiation strategy. Leasing from a small business, a bank or a large corporation comes with a distinct set of advantages and disadvantages. A small business is often easier to reach and resolve issues with but may not have as many resources as a bank or large corporation, for example. Larger businesses and banks usually take longer to process requests and transactions.
Ask how long the landlord has owned the building to gauge their level of commitment. A landlord who has owned the property for a long period of time is usually more likely to improve the building and keep it. A short-term owner may sell quickly, has less knowledge about the property and might not be looking to invest in improvements. Find out if the building is currently for sale so you know if you have any leverage in that area.
Who is in Charge?
Once you know whom the landlord is, found out where they are located. If the landlord isn't local, you might have trouble getting issues resolved quickly. If you're going to be dealing with a property management firm, find out where the firm is and how many other buildings they're responsible for. You need a firm that's available to answer your questions and to help in an emergency.
You'll also need to know who is responsible for the leasing. You might deal directly with the landlord, or they might use an agency or real estate firm. Each person will have different levels of knowledge about the property.
What is the Property's History?
Ask about any special conditions or maintenance issues with the building. An older building, for example, may have ongoing maintenance requirements you'll be partly responsible for paying for.
When you're asking about property history, don't forget to ask about the building's previous occupants. Find out the identities of the final two tenants to move out and the last two in your space. Contact the four tenants to inquire about lease negotiations and their experiences as tenants.
Who is the Biggest Tenant?
The anchor tenant (the largest tenant in the building) is usually what draws customers in. Ask about the anchor's tenancy security. If the tenant leaves, you'll lose valuable foot traffic. You may be able to negotiate a clause into your lease that allows you to break it if the anchor tenant leaves.
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