Five Tips for
Signing a Lease Agreement
want to start a business and are desperate for a good location.
You find an open retail space and are well aware of the
competition for floor space. Don't just sign because
you are afraid you'll lose the space.
out whether there is a turnover clause in the agreement
turnover clause normally stipulates that you must pay a
percentage of your monthly or annual turnover together with
the monthly rent. Some turnover clauses stipulate that if
your turnover is higher than a certain amount, you will
have to pay additional fees to the landlord. If you are
in a business with a low profit margin, don't sign the agreement.
It penalizes you for productivity and will cut huge chunks
from your profits. See if you can't get the percentage lower
and get the penalty clause scraped.
of lease agreement
landlord will try to get a long term agreement of three
to five years. You should negotiate for a one to two year
contract with automatic renewal unless you give notice.
Opening a new business is risky. Yes, you believe that you
will succeed, but you have to make sure that you don't get
stuck with an unreasonable contract or landlord. You can
sign an option to change th econtract to a long term contract
after twelve months. This will give you the opportunity
to see whether your business will make it or not and prepare
you for sudden increases of rent. If you are a manufacturer
or will have a large shop fitting layout, go for two years.
escalation in rent
caution when the contract stipulates 12 percent or higher.
It should be the same as the rest of the market and in line
with inflation. Ask for a set increase if the contract doesn't
stipulate it at all to prevent unwanted surprises later
contract must stipulate what you are paying for. Does it
include electricity, security, center management, marketing,
and parking? Check for hidden costs.
of the retail lease agreement
will renewal be determined? Try to get automatic renewal
rather than negotiation and have the escalation stipulated
in the contract.