Lease Negotiations for Franchisees

Your lease negotiations when Franchising.

Your Franchise agreement may have language that will control the commercial leasing aspect of the business.  In most agreements there will be a level of control established by the Franchisor over the leased premise. Sometimes this is done by having the Franchisor being the lessee and then providing a sublease to the franchisee. This gives the Franchisor direct control over the premise. Another mechanism is to simply provide that any lease entered into by the Franchisee needs to have language that will give the franchisor an option to take over a lease if the franchisee is unable to satisfy the terms of the lease. This can be accomplished by having the landlord agree to not take any action for defaults under the lease terms, before giving notice to the franchisor and allowing them the ability to cure the franchisee’s deficiencies.

Finding commercial space, can be difficult to begin with. Now add in the fact that your Franchise agreement is asking for specific terms in the commercial lease agreement! Maybe you are thinking: Will I be in default because I can’t find space and a landlord that will work with my Franchisor’s terms? Finding a landlord amendable to those terms is an added layer but fear not, many franchisors are involved in the premises selection and the franchisor will often assist in the negotiations with the landlord to obtain the necessary leasing terms.