When owning and operating a business, the day to day can be rather demanding. Which means that sometimes, important details slip through the cracks. An extremely common issue amongst business owners is when they don’t take the time to fully understand or comprehend their leases. And as you could guess, could lead to a variety of problems. Being aware of each of the essential points within your business location’s lease is a key part of your success. Some businesses such as restaurants and services, fully rely on being location sensitive.
Don’t Let Key Details Slip by You
Regardless of what kind of business you own, it is vital that you understand every aspect of your lease. Oftentimes business owners will hire an attorney to help understand the implications of the minor points. Avoiding the time it takes to comprehend these points could result in the failure of your business.
The Length of Your Lease
This tops the list of factors that you will need to completely understand. While there are many variables that will affect you, in general, the longer your lease the better. The longer the lease, the higher the increase in your business stability.
Exit and Exclusivity Clauses
If you are negotiating a lease, it is prudent to include an option for getting out of the lease. Just as mentioned above, longer leases provide greater flexibility. The same holds true for being able to exit your lease if the need arises. Leases are not one-dimensional documents, just like your location isn’t either and where your business is located actually matters. If you are signing a lease to locate your business in a strip mall or shopping mall, you should try to have written into your lease agreement that you are the only business of your type that will be located in the mall. After all, the last thing you want is to see a similar business opening up nearby.
Transferring Your Lease
Although lease longevity and being able to terminate your lease at any time are critically important, so is being able to transfer your lease. You may need to up and sell your business in the future, unexpectedly or otherwise. Having a clear and concise understanding of how to transfer and under what circumstances you can transfer your lease to a new owner will be imperative.
You should have a discussion with your landlord about the potential of selling your business in the future before you go to market, so that you both are on the same page about what your lease is able to convey. While the landlord cannot restrict the sale of your business, you could get left holding a personal guarantee in order for the lease to remain in place for the remainder of the existing lease term. Then the new owner would be left to negotiate the lease renewal on their own.
Assignment of Responsibilities
Determining what you are responsible for and what your landlord is responsible for is another key factor in rounding out your lease agreement. Sometimes as a business owner, you are required to handle specificities related to the property itself. If so, those responsibilities should be clearly outlined in the lease.
Of course, there are many variables to consider when choosing to own and operate a business. Location consideration should be amongst your top priorities, and you should do everything possible to understand your lease down to the very last detail. And remember, when in the process of signing a new lease, try to negotiate factors that are as helpful to you as possible.
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