October's Featured Speakers: Dale Willerton & Jeff Grandfield, The Lease Coach
Dale Willerton will be a featured speaker at the upcoming International Restaurant & Foodservice Show of New York.
Understanding How Far in Advance to Initiate the Lease Renewal Process
Ideally, a restaurant tenant wants to start the lease-renewal process about 12 months in advance of their lease expiration date. More precisely, look at your renewal-option clause. If it says your cut-off date for exercising your lease renewal-option is six months before the lease expires, you would start the renewal process six months prior to that (or a total of 12 months in advance). If your renewal-option clause states that the cut-off date or last chance to exercise the renewal-option clause is nine to 12 months before the lease expires, then start your lease-renewal process 15 or 18 months in advance.
As a restaurant tenant, remember that your strength or leverage may lessen the closer you get to your cut-off deadline, so the farther in advance you can find out what the landlord wants to do with your tenancy and rental rate, the more time you have to react. If you’re going to get bad or disturbing news, you’ll want to hear that information sooner, rather than later. Keep in mind, however, that most landlords want and plan to have their restaurant tenants renew, so you’re usually on the same page, plan-wise anyway.
This also applies in cases where you don’t have a renewal option and want to remain in your same location. The closer you get to the end of your term, the less relocation time you have, and it becomes clearer to the landlord that you cannot or don’t intend to consider a relocation. There’s also the peace-of-mind factor of putting the lease renewal to bed well in advance, if possible. You may want to plan renovations or, if you’re a restaurant franchise tenant, you may need to also negotiate your franchise-renewal agreement or extension.
When it comes time to renew your lease, whatever you do, don’t say, “I’m calling to renew my lease” when you get on the phone with your landlord. Everything you say and do at this stage is critical. Resist sharing your intentions with your landlord and keep your cards close to your vest, as they say in Las Vegas. The goal is to receive a written lease-renewal proposal (or lease-renewal agreement) rather than make the first offer or renewal proposal to your landlord. By doing this, you remain in control.
Finally, remember that, as an established tenant, you have proved yourself as the landlord’s customer. It is the landlord who should be pursuing you and not vice versa.
For a copy of our free CD, Leasing Do’s & Don’ts for Restaurant Tenants, please e-mail your request to DaleWillerton@TheLeaseCoach.com.
More about Dale Willerton & Jeff Grandfield:
Dale Willerton and Jeff Grandfield - The Lease Coach are Commercial Lease Consultants who work exclusively for tenants. Dale and Jeff are professional speakers (including repeated presentations at major restaurant shows) and co-authors of Negotiating Commercial Leases & Renewals For Dummies (Wiley, 2013). Got a leasing question? Need help with your new lease or renewal? Call 1-800-738-9202, e-mail DaleWillerton@TheLeaseCoach.com or visit www.TheLeaseCoach.com.