Negotiating commercial leases: Use the franchise advantage
Wednesday, November 14, 2018
For many commercial tenants, negotiating a good lease or lease renewal against an experienced agent or landlord can be a challenge. While an entrepreneur focuses on marketing and managing his own business, savvy real estate agents and brokers are specialized sales people. Their job is to sell tenants on leasing their location at the highest possible rental rate.
Tenants may go through the leasing process only two or three times in their entire lifetime — yet they have to negotiate against seasoned professionals who negotiate leases every day for a living. Negotiating appropriate leasing terms is vital for a commercial tenant as the amount of rent he or she pays will directly affect the entrepreneur’s financial bottom line.
Whether you are leasing a new for the first time or negotiating a lease renewal for your business, here are some tips:
Use the franchise advantage
If you are thinking of joining a franchise system, you should be rewarded with a lower commercial rental rate. However, a franchisor — hungry to sell you on their business concept or a franchisor using a landlord-paid agent to negotiate for you — may not be doing you any favors.
A franchise name is often more recognized than an independent tenant’s name and, therefore, will be desirable to a landlord. Talking to existing franchisees is always recommended.
You are the customer
Far too often, entrepreneurs act as if they are applying for a lease. Remember, however, that you are the customer.
If you want to be in the driver’s seat for the lease negotiations, you must remember who is serving whom. The entrepreneur sets the meeting time. The landlord’s agent picks up or drops off documents to you.
Shrewd tenants never pick up the restaurant bill if dining over lunch with the agent or landlord. You must never put yourself in the position of seller. You must always appear to be the buyer … and the customer never pays for lunch.
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