Commercial Restaurant Tenants: Know What You Are Getting Into

The prospect of renting out a commercial property, no matter the size, can be an exciting one. You may be concerned about how to handle some leases, however, as businesses can vary widely; for instance, there is a big difference between renting to a family bookstore that might at the very most serve coffee—to renting out a space to a full-scale restaurant. Consult with an experienced business attorney for assistance in negotiations as well as creating a comprehensive contract for the rental term. In the meantime, consider these issues before agreeing to take on a tenant:

Are you okay with major retrofitting to the space? A potential restaurant owner may need to come in and completely overhaul the property, even it was previously a restaurant space for another company. Consider the ramifications of this if they go out of business (as all too many new ventures do) and you are left with their new floorplan.
Does the restaurant owner in question have a good financial and credit history? Do they have a detailed business plan that both you and your attorney can look over? Even if they seem to have more than enough financing for the deal, there could be problems later if their business model is not realistic, or they do not have the experience to run a restaurant.
What type of lease does each of you want? If the potential tenant wants a very long lease (and this could be the case especially if you are dealing with a franchise led by a corporate office in such dealings), consider whether the owner of this new establishment is someone you think you can work with long-term.
If you own other buildings in the vicinity, or perhaps a whole strip mall even, examine the potential for conflicts with other tenants. Would this tenant be in direct conflict with others? Might they cause environmental concerns or other issues that would make it tough for them to fit in?

Speak with your business or real-estate attorney about other issues that could arise, along with the creation of and any additions to the contract/lease, should the deal be on its way to going through.

Do you have questions about drawing up a commercial lease or another business or real estate contract? Are you in the middle of a dispute and require experienced representation? Call Shane Coons now at 949-333-0900 or email us at Shane.Coons@seclawoffices.com. We will be glad to review your case, answer your questions, and help you move forward with success.

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Commercial Restaurant Tenants: Know What You Are Getting Into

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