Lindy: If the mall requires a personal guarantee, see if you can get a "kick out" (early out or rights of early termination) clause. These are very common in commercial leases. Many landlords will allow them, especially in this market. You may have to pay a fee if you exercise your early out option, but it is another way of protecting yourself from a long lease term if you decide you want to terminate your lease or downsize (you will probably have to fulfill at lease a full year, maybe more in order to get an early out). In addition, you can ask for a transfer clause or first right of refusal on a larger space (in case you grow). Also, check the lease to see if it is a % lease. You would end up paying a % of your profits if it is. (I have done commerical sales and leasing for over 10 years, but I haven't done % leases, so I am not as familiar with them).
See if the landlord will give an exclusive on your agreement, so that you are the only soapmaker leasing in the mall. They probably will not do this in a mall, but you never know. Many of the franchises will not lease in the same strip center if they do not get this (example might be Subway and Quizno's).
Protect yourself at renewal also. Will they put an option to renew in your lease? If your neighbor has outgrown their space and needs three more bays. The landlord will not want to lose this tenant, therefore they will lease them the spaces next door upon the expiration of those leases. But if you have the option to renew, they can not do this unless you are moving out because you have the first option. Will they put a cap on rent increases upon renewal? The reason for this is to keep your rents from excalating too high.
Also, many management companies/landlords will give rental concessions. If the mall has a lot of vacancy, ask for this. You may be able to get your first months rent free or more. I've seen some individuals get up to a year free if they are doing their own extensive buildout. In commercial RE, you can ask for anything, the worst most landlords will do in this market is counteroffer your request.
And last, but not least... read everything on the lease...it is important. Show it to an attorney if you do not understand it. I hope this info helps you (and doesn't overwhelm). If I can think of anything else off the top of my head I'll let you know. Good Luck to you and Congratulations! Bnky
See if the landlord will give an exclusive on your agreement, so that you are the only soapmaker leasing in the mall. They probably will not do this in a mall, but you never know. Many of the franchises will not lease in the same strip center if they do not get this (example might be Subway and Quizno's).
Protect yourself at renewal also. Will they put an option to renew in your lease? If your neighbor has outgrown their space and needs three more bays. The landlord will not want to lose this tenant, therefore they will lease them the spaces next door upon the expiration of those leases. But if you have the option to renew, they can not do this unless you are moving out because you have the first option. Will they put a cap on rent increases upon renewal? The reason for this is to keep your rents from excalating too high.
Also, many management companies/landlords will give rental concessions. If the mall has a lot of vacancy, ask for this. You may be able to get your first months rent free or more. I've seen some individuals get up to a year free if they are doing their own extensive buildout. In commercial RE, you can ask for anything, the worst most landlords will do in this market is counteroffer your request.
And last, but not least... read everything on the lease...it is important. Show it to an attorney if you do not understand it. I hope this info helps you (and doesn't overwhelm). If I can think of anything else off the top of my head I'll let you know. Good Luck to you and Congratulations! Bnky
