It may be your dream to own your entire business right down to the land where it sits, but if you’re like most business owners, you are currently leasing your business space. When was the last time you looked at your lease and brushed up on its details?
Don’t underestimate the importance of knowing your commercial lease. Sometimes, the information hidden in the fine print can make or break your business! Here’s what you need to know.
Lease terms have caused countless business sales to fail. It is possible that your existing building lease contains clauses that can complicate the terms of your sale or make it impossible altogether.
Assignment and Subletting
The authority to assign and sublet a restaurant is often restricted to the landlord. You should expect to seek your landlord’s approval before initiating negotiations, though some leases do contain the term “permitted transfer” to allow for sales without landlord consent.
Renewal Options and Periods
Most restaurant leases require business owners to renew a lease no more than 180 days prior to the termination of the current lease term. This puts you into a position of having to exercise your renewal option in a relatively short period of time, which then puts you at risk of getting locked into battle with your landlord over a lapsed lease and lost option rates. (more…)