Mastering Lease Discussions for Restaurant Entrepreneurs and Management: A Tailored Handbook

Buckle up for a thrilling ride through the realm of restaurant leases, my friend! This guide dives deep into the world of financial stability and operational freedom for your restaurant.

The reason learning lease management is a game changer? Picture your place thriving in an ideal location, thanks to smart negotiations. Without understanding your leases or knowing crucial milestones, you might lose your location and end up out of pocket by over $400,000 – just like Tim Doktorski, Controller at Team Wow, a Domino's Pizza franchise with 70 locations.

Ready for takeoff? Here's a checklist that serves as your secret weapon to protect those hard-earned dollars.

Let's Decode Those Lease Terms

It's not just about reading the lease; it's about deciphering it! We're talking base rent, additional rent, lease duration – the whole nine yards. But it's the fine print that really counts. Are all those documents attached? Are the blanks filled, or are there hidden surprises lurking? Get armed with knowledge to navigate through those lease negotiations like a pro.

In the meticulous process of reviewing your lease, make sure all exhibits and referenced documents are carefully appended to the copy you're about to sign. Pay close attention to any blank spaces. Lack of information may hide unforeseen complexities that could surface later.

In the context of lease terms contingent on variables, introduce a Rent Commencement Date Agreement as an exhibit. In detail, specify that both parties – including yourself – will endorse the form to confirm the dates for your lease. This provides clarity on when your restaurant officially starts operations.

Dive into the intricacies of the clauses, especially those relating to maintenance, repairs, and HVAC maintenance. Gain a clear understanding of what financial obligations come with the lease agreement.

Time to Negotiate

Lower rent, longer lease? It's a dance, my friend. Support your arguments with market research; let the facts do the talking. Watch out for CPI increases – they can sneak up and increase your rent unexpectedly.

Don't forget concessions; landlords often have tricks up their sleeves like tenant improvements or rent abatements. Ask about these perks for playing the long game.

CAM charges – the seasoning of the leasing world – need to be tackled. Negotiate like a pro. Set a cap on CAM for the first year, ongoing caps, and demand the right to audit these charges for transparency.

Finalizing the Deal

As you inch closer to finalizing your lease negotiation, let's get down to business:

Legal Review:

Consult with retail leasing experts – your special forces to navigate the complex review process. Address any concerns raised by your attorney to ensure a smooth review and a solid foundation for your lease agreement.

Documenting Agreements:

Think of this as the script for your leasing movie. Document each negotiated change to avoid miscommunication in the future. Verbal agreements might offer charm, but in the real world, a solid written contract will serve as your best defense in case of legal disputes.

Review Final Lease:

Scrutinize every detail in the final draft. Confirm that all negotiated terms are reflected accurately and completely.

Final Approval and Execution:

Secure signed copies from both parties. Keep these records handy for future reference.

Keep the Momentum Going

Don't let your lease victory be the end of the story. Maintain open lines of communication with your landlord, broker, or property manager. Building a strong relationship can lead to future opportunities.

Regular reviews are essential to ensure everything runs smoothly and everyone plays by the agreed-upon rules. Set up reviews when there's a change in ownership or management, when you're expanding, when the rent is on the move, or during the triple net lease reconciliation.

If you're using lease management software like Leasecake, awesome – it's like having a personal assistant for your business dates. Automated reminders will be your best friend. If you're finding ways to manage without it, be sure to handle those reminders manually.

Feeling like a lease renewal might be on the horizon? Prepare for round two well in advance. Some renewals kick off up to 24 months beforehand, and waiting too long can diminish your negotiating power. Stay ahead of the game, and you'll be in control.

Remember, your lease is not just a piece of paper; it's the foundation of your success. Follow these steps, and you're not just negotiating; you're crafting the story of your financial success.

For extra guidance, explore lease and location management software at www.leasecake.com. In the world of lease negotiations, having the right tools can make all the difference.

Happy mastering, and best of luck with your lease negotiations!

Taj Adhav

Founder, Leasecake

To maintain a thriving restaurant and avoid unforeseen financial losses like Tim Doktorski of Team Wow, it's crucial to decipher, negotiate, and review every lease term, including base rent, additional rent, lease duration, and more, especially the fine print.
During lease negotiations, supporting arguments with market research, watching out for CPI increases, and negotiating fair CAM charges with caps and audit rights can lead to lower rent and longer leases.
To secure a solid foundation for the lease agreement, ensure all exhibits and relevant documents are appended to the copy, pay close attention to blank spaces, and document each negotiated change in the final draft to avoid miscommunication.
After executing the lease, maintain open communication with the landlord, build a strong relationship, and conduct regular reviews to ensure smooth operation and adherence to agreed-upon rules. Additionally, consider using lease management software like Leasecake for automating reminders and maintaining a well-organized lease record.