Signing into a commercial lease can be easy enough; however, terminating that lease may be far more challenging. Unfortunately, breaking a lease may become necessary if your tanning salon business is struggling. As a leasing expert, I will address this touchy topic by sharing a number of related questions I have been asked through the years.
I am three years into a five-year lease on my tanning salon space. Business is not as brisk as originally anticipated and I am considering breaking my lease. What do you recommend?
In following due process, the first thing that should be done is to seek professional guidance and develop a plan. I have been very successful in representing tenants and talking to their landlords about the problem. If sales are down, it may not be related to the property; therefore, do not be overly critical of the property, otherwise your landlord will become resistant. With proper persuasion, the commercial landlord can often take back his space and re-lease it. Therefore, it is to the landlord’s advantage to precipitate a vacancy by working in advance to find a replacement tenant. This allows the landlord to maintain cash flow. Instead of a conspicuous “Going Out of Business Sale” sign in a tenant’s window or a “For Lease” notice on the outside of the property, the public will see signage welcoming a new tenant into the property.
A business acquaintance of mine has been eyeing my space for months … can I suggest him to my landlord as a possible replacement tenant?
Indeed you can! Commercial landlords are more likely to be cooperative terminating your lease if a replacement tenant can be found for your space. As the exiting tenant, you should approach the landlord and make the introduction. As the existing tenant, you will surrender your Lease Agreement and location back to your landlord. A new Formal Lease is then drafted up for the new tenant. The new tenant signs his/her new Lease Agreement and begins paying the rent. This releases you of any further obligation if negotiated and documented properly.
In doing a little homework, I understand that I can “assign” my lease agreement … can you clarify what this means?
Essentially, assigning your lease agreement means finding another prospective tenant to agree to take over your commercial space and your current lease terms. If the person taking an assignment of your lease agreement has also purchased your tanning salon, this is more acceptable to the landlord than if the use is completely changing to a different industry. In this case, a secondary or replacement Formal Lease is not required; usually, a two or three-page Lease Assignment Agreement, prepared by the landlord, will be all the documentation required to get the job done.
Other than terminating my commercial lease, do I have any other options?
Are you faced with excessive space, or can you downsize your tanning operation and consider other vacant space in the same property which might be better for your needs? With commercial rents being charged by the square foot, tanning tenants leasing less space typically will find the rent more affordable. A commercial landlord can be willing to free you from one leasing obligation should you remain in his or her property.
• Got a leasing question? Like a complimentary copy of Willerton’s CD, “Leasing Do’s & Don’ts for Tanning Salon Tenants?” E-mail dalewillerton@theleasecoach.com to see your questions answered in an upcoming article.
Dale Willerton is “The Lease Coach” and a senior lease consultant who works exclusively for tenants. As an ITA member, he has spoken at many North American tanning conventions. Willerton is 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 .
