How Can You Best Negotiate Your Franchise Lease? Know these Five Crucial Terms

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What are the key terms that a prospective tenant of a commercial lease should consider prior to signing a commercial lease?

A prospective tenant should consider negotiating the following key terms in their commercial lease:

1. What are the Common Area Maintenance charges in the commercial lease that will be passed through to you, as a commercial tenant? Are they going to be capped?  Do you have a right to review the books and records of the landlord to ensure that the calculations are correct?

2. When does rent commence in the commercial lease?  It is not unusual, even in this day and age, to negotiate a period of free rent and/or tenant improvement allowance to be used towards the build-out of the premises. Clear definitions of when the commercial lease commences and when rent commences should be identified.

3. What is the original term and rent and renewal terms and rent? Is rent increased as a percentage each year or by a specified dollar amount each year?

4. What warranties will the landlord provide? Will the landlord warrant that both the premises and the shopping center are compliant with the Americans With Disability Act?  Will the landlord warrant that the premises and shopping center are compliant with all hazardous substances laws, federal, state and local?

5. Will the landlord provide a reduction in rent for various contingencies such as the anchor store of the shopping center remaining empty for a specified period of time or a certain number of the other stores in the shopping center remaining empty for a specified period of time?

These are just 5 of the many types of lease clauses that should be negotiated prior to signing a commercial lease.

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