6 Things No One Ever Tells Franchise Tenants about Leasing Commercial Space

Date

Dec 12, 2014

As a franchisee and tenant, you may already have some preconceived notions about commercial leasing. Here are some things that no one (except The Lease Coach) tells a franchise tenant:

Start the Leasing Process Well in Advance – It Always Takes Longer Than Tenants Think it Will. For a new location lease agreement, get started six to nine months in advance to avoid unexpected delays. Lease renewal negotiations should begin between nine to 12 months before the lease term expires. This will give you sufficient time to look at other sites and do your homework. If you can’t get a decent renewal rate, would you rather find out you need to move with three weeks or six months left on your lease term? Time will be your ally or your enemy, depending on how you use it.

Understand that Real Estate Agents May Not be Your Best Ally. You get what you pay for, right? Well, if the franchisee isn’t paying the agent to represent them, they perhaps you really do get what you pay for. On the one hand, the agent is free of charge to the franchisee, so that’s good, right? It depends on what you expect the agent to do for you. Can the agent negotiate for the franchise tenant to get the lowest rental rate as well as the most free rent and tenant allowance? If the local agent you have been referred to has negotiated many deals with a specific landlord, which relationship is more important to them – one deal with you or many deals and listings with the landlord?

Before You Get Lawyered Up, Make Sure You Are You Using the Right Tool for the Job. Franchise tenants who use lawyers are typically trying to make sure the lease agreement is legal, rather than trying to get a good lease deal. Consider that the actual leasing process is comprised of many steps or phases. You may feel safer using a lawyer to review your lease agreement but should that lawyer or attorney be used for every step of the deal-making process? Not likely. Research the Prospective Landlord - It’s a Business, not a Marriage: Opening a franchise business and leasing space from a landlord may seem like a marriage, but it’s not, and franchise tenants need to understand this. A typical landlord may have several hundred or even several thousand tenants, but the typical tenant has just one landlord. Furthermore, the landlord owns their property as an investment. The franchise tenant is leasing the space as a means to an end. The landlord wants to own the property. The franchise tenant doesn’t really want to lease space – the franchise tenant wants to operate a successful business. A franchise tenant is not in business with the landlord; they are doing business with the landlord. The moral is that the landlord and tenant don’t have the same goals or interests.

Deposits and Personal Guaranties are not Legally Required – They’re Negotiable.

Security deposits and/or personal guaranties are not legally required and are negotiable points. The Lease Coach has successfully negotiated for no deposit at all and the return of many deposits during the lease renegotiations. If agreeing to a personal guaranty, know that these should not last forever – instead, a personal guaranty should be measured and burn off or diminish over time.

Get Professional Help from a Lease Consultant who You are Paying to Help You, Not the Landlord. A lease consultant can evaluate your situation and requirements so that you can decide how much help you need and what you want to handle on your own. Although real estate agents may be involved at some point through certain leasing scenarios, a lease consultant can provide you with well-rounded assistance from start to finish with almost any lease deal.

For a copy of our free CD, Leasing Do’s & Don’ts for Franchise Tenants, please e-mail your request to DaleWillerton@TheLeaseCoach.com.

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 visit
www.TheLeaseCoach.com.

 

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