Leasing Instructions: A Frank Talk with The Lease Coach
Restaurant franchisees gathered in New York last month for the International Restaurant & Foodservice Show. The event typically attracts restaurant owners and partners (34% of attendees last year were from the restaurant industry and 40% of these individuals were managers and key decision makers) who come to bone up on the latest strategies, techniques, and technology. There's always plenty to see and do at the event.
Dale Willerton - The Lease Coach - was one of the speakers at this year's meeting. He led two sessions, "13 Costly Mistakes Restaurant Tenants Make Negotiating a Commercial Lease or Renewal" and "101 Leasing Tips for Restaurant Tenants."
I had a chance to visit with Willerton at the show - and in between sessions - and ask him a few questions.
What is The Lease Coach?
This is a term I trademarked back in the early 1990's. Until then, I was working for landlords as a commercial leasing agent for a major shopping centre. My job was to meet with prospective tenants, show them available rental space and secure signed lease deals. I realized back then that it wasn't the landlords who needed my help, it was the tenants. After all, commercial landlords and their agents negotiate leases regularly and are well-versed in the process ... a restaurant owner may be lucky to negotiate one or two such leases in their lifetime. As The Lease Coach, I now wholly represent commercial tenants; I advocate for them and provide many leasing-related coaching services.
What should restaurant franchisees know about commercial leasing?
First and foremost, restaurant franchisees should never totally rely on their franchisor. Don't get me wrong - I am a firm supporter of the franchising process; however, many franchisors simply do not have the time or the manpower to help their franchisees with real estate matters. Yes, the franchisee will be supported with many related matters; however, they may be left out to dry with regards to site selection and lease negotiating. What I mean by this is that these issues will be left up to the franchisee to handle. This is typically uncharted territory for a restaurant franchisee so it is expected that they will struggle.
What is another tip you can share?
A secondary issue which restaurant franchisees must understand is who the broker/agent/leasing rep actually works for. Far too often, I have heard business owners refer to the agent as "MY agent" - I typically point out that this is not the case. No matter what the term (agents/brokers/leasing reps), these are specialized sales people on staff for the landlord. What is most important to them is a signed lease deal as, with your commitment on an Offer to Lease, they will receive a healthy commission check from the landlord. The larger the space you lease, the larger that check will be... this can prove to be a nice incentive for the agent. Even if the agent claims they are serving as a "dual agent," the restaurant franchisee must be cautious. Essentially, "dual agency" means that the agent is working for both the landlord and the tenant. My question is, just how is this possible?
What amount of time do you recommend to properly negotiate a lease renewal?
In my experience, I typically recommend a minimum of between nine and 12 months; however, more time is always better! You may encounter any number of roadblocks when trying to meet with your landlord and you must also anticipate Murphy's Law (that is, that anything that can go wrong will go wrong). Therefore, if there are unexpected delays of whatever nature, the restaurant franchisee will have more time to react and move, if necessary. With bigger restaurants, franchisees should begin the renegotiation process even further in advance as a larger business will take more time to relocate, if necessary.
For a complimentary copy of Dale's CD, Leasing Do's & Don'ts for Franchise Tenants, please e-mail to DaleWillerton@TheLeaseCoach.com.
Dale Willerton is The Lease Coach and a Senior Commercial Lease Consultant who works exclusively for tenants. Dale is a professional speaker and author of Negotiate Your Franchise Lease or Renewal. Got a leasing question? Need help with your new lease or renewal? Call Dale at 1-800-738-9202, e-mail DaleWillerton@TheLeaseCoach.com or visit www.TheLeaseCoach.com / www.HelpULeaseFranchise.com.