There is a simple answer to this question, which was asked by one of our followers last month.
The problem is, far too many business owners don’t know or don’t understand that they do, in fact, have the power to negotiate. In other cases, they may be aware of their rights but they simply don’t know how to properly exercise them.
You Do Have a Choice
There is a shocking trend we see in our line of work: landlords adopting the position of “take it or leave it” when it comes to lease agreements. In such cases, tenants often sign even though it isn’t in their best interests to do so. Why? Location dependency, hasty decision making, fear of losing what they think is the perfect property, and missing or misunderstanding the provisions in the agreement are all common reasons. But that doesn’t mean they’re good reasons.
Think About the Future
It’s easy to sign quickly, particularly if the terms do not immediately affect you. For example, it is stated that rent can increase upon renewal but there is no mention of fair market value. There are termination or demolition provisions, but you can’t foresee the landlord demolishing the building anytime soon. There is a clause that states the landlord can relocate you elsewhere in the plaza with no indication of whether or not the new rent will be based on the same rate per square foot.
New business owners often place too much weight on the price per square foot. But there is much more to it than that. What is the lifetime value of your lease? Although price may be important in the first few years, think about how that might change in five years, ten years or even fifteen years. As your business and your profits grow, your focus may be less on the square foot price and more on the points mentioned above.
And then the key question becomes: did you do enough to protect yourself at the time of signing?
Create a Venue to Discuss
This is exactly what a competent lawyer does. They open the conversation and facilitate the back and forth movement of communication that ultimately results in a fair lease agreement. A good lawyer understands your business, knows your budget, acknowledges your future goals and respects your current position. They’re able to pinpoint problems and prompt you to think about the repercussions of what you’re signing.
We often say, “there’s no such thing as a perfect lease”, but with a good lawyer by your side, you can negotiate, you know exactly what you’re signing, and you make an informed decision that reflects your best interests.