As a franchisee, you may have found it quite easy to secure a lease with a commercial landlord; however, you may face many roadblocks if, or when, you need to terminate your lease.
With franchisor support, better name recognition, and industry history behind them, franchisees are typically more desirable to a commercial landlord as tenants than independent business operators. Even though you may have had the advantage in negotiating your initial lease with your landlord, you may not necessarily have this same advantage.
I have been coaching and consulting with independent and franchise tenants since 1993. Over the years, how to terminate a lease has proved to be a common question and rightfully so. Should the tenant continue to lose money? No. There are numerous options available that we have been able to use to terminate leases for tenants - often with very limited financial losses and no bankruptcy required. In no particular order, my professional recommendations are as follows:
Overall, franchise tenants should carefully consider these various options as well as their own situations prior to terminating a lease. Taking initial precautions prior to signing a lease are often best (such as having a professional lease consultant review the document for your own protection). If you have never gone through this before, it is reasonable to expect that you will need some help.
Franchise tenants should not rely on their franchisor to proactively help them or troubleshoot their leasing problems. Often, the franchisor's real estate department is focusing on new leases for new franchisees but doesn't have the time or the budget to work with existing franchisees with leasing problems. Countless tenants, both franchise and independent, have benefitted by using an independent commercial lease consultant who is not acting as a real estate agent nor legal counsel. I specialize in negotiating lease renewal rent reductions, midterm rent reductions, and lease terminations. There is a formula that landlords will positively respond to so don't hesitate to call me for a free consultation.
Dale Willerton is The Lease Coach - a Senior Commercial and Retail Lease Consultant who works with franchisors and individual franchisees across NorthÂ America. Willerton is author of "Negotiate Your Franchise Lease or Renewal"; he speaks frequently at franchise shows and provides real estate training to franchisors and chains. Visit www.TheLeaseCoach..com / www.DaleWillerton.com/www.HelpULeaseFranchise.com or call 1-800- 738-9202.
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