Pitfalls of Commercial Leasing
THAT YOU NEED TO AVOID No entrepreneur or franchiser wants to get trapped in a commercial leasing agreement that cannot be terminated without significant penalties. Here are some of the pitfalls to avoid. By Sara Jensen
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or any entrepreneur or franchiser, commercial leasing means major investments and should require in-depth research and experienced advice. Whether it is hidden costs or a hard-headed landlord, you don’t want to get trapped in a long-term commercial leasing agreement that cannot be terminated without high costs and penalties to you. Below, we offer some expert advice on some of the most common types of commercial mistakes that can throw you in a pit. DO NOT PROCRASTINATE
We have heard that the early bird gets the worm, but now it's time to put these words into practice. Don't hold off on searching for your commercial space until the last minute. Industry experts say that tenants should start looking for spaces less than 10,000 square 30 FRANCHISE CONNECT | SEP-OCT 2019
feet at least six to nine months ahead of time. That’s because it could take you that amount of time to search for a suitable property, perform due diligence, and then come to a lease agreement. In fact, if your space needs to be remodeled or renovated, you can move your timeline by as much as 12 months. The larger the business, the more complicated your leasing process will be, so big corporations and franchisees need to start even sooner This also goes for renewing your lease. If you put off approaching your landlord until two months before your agreement expires, you will hardly have any time to negotiate better terms as your landlord will know you don’t have time to find another place.
DO NOT HOLD OFF ON SEARCHING FOR YOUR COMMERCIAL SPACE UNTIL THE LAST MINUTE.
To make sure this doesn’t happen, tenants should look for plenty of other options, familiarize themselves with real estate trends, and start negotiation several months before they need the building. NOT PERFORMING DUE DILIGENCE
No matter how much you try to avoid it, you cannot have a successful commercial leasing agreement if you don't do your homework. Tenants who forego due diligence may later receive some nasty surprises. In some cases, they will find out that the building is inadequately wired, which could have been factored into the leasing deal if they had known about it beforehand. In other cases, the building’s infrastructure may be old or outdated, which could be inadequate for the business. One of the most important things to check is the HVAC system which should always be in good working order; otherwise, you will need
