The economic recession continues to take its toll on many businesses, with the tanning industry being one of the hardest-hit segments. This month’s installment of commercial leasing Q&A’s contains a number of recent questions relevant to this situation. I hope the information will be of value to you, whether you are an independent or franchised tanning tenant.
Q. Sales at my tanning salon are down 15 percent from last year. Can I now get a 15 percent rent reduction from my landlord?
A reduction in sales in your tanning salon may not be enough on its own to get you a rent reduction. However, if the property has vacancies, if other tenants are planning to move out at the end of their lease term, and if any new tenants are paying an adjusted lower market rental rate, it would certainly be worthwhile approaching your landlord about a rent reduction. Remember, landlords like to see the facts, so be prepared to share your sales receipts or open your books. Also, a reduction in your sales volume does not automatically indicate that the landlord is overcharging for the space for lease.
Q. I am opening up my fourth tanning salon in a newly developed suburb. There are three locations to choose from and I just can’t make up my mind. Help!
Think in terms of where a competing tanning salon might set up business in the new suburb. Part of your site-selection process is to locate your new tanning salon in such a strategic location that it will discourage future tanning salons from opening because you have picked the best location. The best location, in this case, can be defined as the most visible with the most immediate traffic flow.
Q. I am planning to sell my tanning salon, but I only have 10 months left on my lease term. Will the purchaser be able to exercise my renewal option once he/she has purchased the tanning salon?
Not necessarily. Many landlords consider the renewal option term to be personal to the original tenant. Do not assume that you have certain rights just because the lease agreement may be silent on this issue.
Q. A competing tanning salon recently opened half a mile from my location. My sales are down; what should I do?
Relative to your lease agreement, you should approach your landlord well-prepared and request a rent reduction due to the new competitor in your neighborhood. Your landlord may not know that you are suffering if you don’t actually share this information with him.
Q. My tanning salon is only operating at about 70 percent capacity and my rent is too high. What can I do?
In my line of work, I have successfully negotiated to downsize many tenants, including tanning salons – one just reduced by half in size. Now, this salon is profitable and sellable because the overheads have been reduced. Downsizing could be an answer to your problem if you want to reduce expenses.
Q. I am a tanning salon franchisee and the location that the franchisor picked for me is not working out as well as originally anticipated. If I want to open another location, how can I make sure that I am getting a great location if the franchisor is controlling the process?
You are wise to take control of your own destiny. Even if a franchisor is well-meaning, he/she often does site selection from a distance and may not be in-tune with your specific city or area. If the franchisor will not proactively send an in-house real-estate person to your city for site selection, then you need to challenge his/her commitment to success. Take charge; don’t be passive.
Want to see your leasing question answered? E-mail dalewillerton@theleasecoach.com and watch for the answer on LookingFit.com!
Dale Willerton is “The Lease Coach” and a certified lease consultant who works exclusively for tenants. As an ITA member, The Lease Coach has spoken at many North American tanning conventions (including three times at the World Tanning Expo in Nashville). Willerton is a scheduled presenter at this year’s West Coast Tanning Expo (June 14-15, 2010) in Las Vegas. He is also the author of “Negotiate Your Tanning Salon Lease or Renewal.” Call him at 800.738.9202, e-mail dalewillerton@theleasecoach.com or visit www.theleasecoach.com or www.helpuleasetanning.com.
