With average annual revenue of $400 billion and a projected growth of no less than 4 percent this year, the US restaurant industry is an economic super power. Its impact in the overall economy exceeds the trillion marks. If the restaurant industry were a country, it would outrank some of the most progressive economies in the world – despite the challenges it faces. As of date, there are over 960,000 restaurants alongside 12.8 million employees contributing to this formidable economic sector. This industry ranks second in terms of providing employment opportunities. It’s not amazing why there are lots of new business-minded people who choose to join the restaurant industry. If you’ve finally decided to invest in this industry, you will definitely need a Restaurant Lease Agreement. But before you start with your restaurant business, you must know how to review and negotiate the lease agreement. By carefully reviewing your lease, you can save lots of cash and will avoid losing your investment. The general rule in negotiating a lease contract is to ask questions when you do not understand a term or condition stated in the document.
Here are some helpful tips that can protect your rights when reviewing Restaurant Lease Agreement.
- Insist on a written contract.
- Make sure that the rental fee is reasonable and within the average prices in the same business area.
- Rent adjustments or increases have to be clearly declared in the contract.
- Normally, Restaurant Lease Agreementlasts for at least five to ten years with fixed rental rate. Negotiate with the landlord to allow one year guarantee so that if the revenue do not turn out well, you can back out without accruing any financial liabilities. Checkout restaurant near me for more info.
- Ask for a subletting or assignment clause that allows you to pass on the lease to a new owner should a new tenant or business owner want to continue the restaurant.
- It is also important that the contract guarantees security of tenure. For example, if the landlord decides to sell the property or there is a change in management, the lease remains intact and the new landlord cannot evict you or force you out. Normally, there is a clause that allows you to match the proposed offer of the new management.
- Make sure that the agreement clearly describes the property being leased.
- The agreement must also state the duties and responsibilities of both parties such as maintenance, improvements and repairs of the building, liability insurance, and division of payment for utilities. The Restaurant Lease Agreementmust also state whether parking slots are included or are to be rented separately.
- Check whether a release clause is included in case unforeseen events or force-majeure happen before occupying the space.
- Lastly, make sure you can handle the financial obligations spelled out in the Restaurant Lease Agreement.
Before closing on any deal, do not forget to clarify these touchy topics. These tips can spell success or failure of your business.