Lease Checklist

Term / Renewal Term

Shorter with rights of renewal will be more attractive to franchisees

Other ongoing payments

What other payments are due under the Lease?
Marketing contribution;
Percentage rent.

Use of Premises

Keep as general as possible to allow for operation of different brand.

Assignment

Try to get landlord to agree approval not required for franchisee tenants/sub lessees or licensees.
No landlord approval to change in shareholding of holding company or assignment to a related company.

Refurbishment

What are the Tenant’s obligations? Not required as long as in line with current image of franchise system.

Reinstatement obligation

Ascertain what tenant’s reinstatement obligations are? Try to limit if can.

Landlords obligation

What obligations does the landlord have regarding:
Structural maintenance;
Exterior of premises; and
Weathertightness.

Damage Destruction Provisions

Review carefully. Are there time frames for the landlord to make decisions to repair etc?
At what point can the Tenant terminate the lease?

Relocation provision

When and how much notice can the landlord give to relocate?
What are the requirements for the new premises (comparable to existing premises)?
What compensation is payable?

Outgoings

Review carefully. Make sure you are not paying for outgoings that don’t relate to your premises (e.g. lift costs when you are situated on the ground floor?
Watch out for management expenses. What are these? Should be reasonable.

Insurance

Review the landlord’s insurances? What are the premiums? Make sure the excess is capped and reasonable.

Trading Hours

Do these suit the business?
Is there an option for longer trading hours? What extra outgoings will apply?

Property Law Act

If lease purports to exclude certain provisions. Obtain legal advice to understand implications to you.

This checklist is intended as a guide to some of the things to think about when negotiating a lease. Each individual situation will need to be carefully reviewed to establish the full list of issues which will need to be negotiated.

We can help! Please call for more information. For a downloadable/printable copy of this article click here.

Tim Lewis – Partner

tim@mllaw.co.nz

+64 (9) 307 3324

Important: This information is provided as a guide only and is not intended to be legal advice. You are strongly recommended to consult the services of an experienced lawyer.