Tanning Salon Leasing Q & A’s

Last month, I began working with Looking Fit and shared several preliminary Q & As; these focused on commercial lease negotiating for tanning tenants. As The Lease Coach, I have fielded many such questions either by telephone or in-person following one of my speaking presentations. I am pleased to continue sharing these tips, which could be relevant to your own leasing situation:

Q. I’m planning to open a new tanning salon in the spring. How many months in advance should I start looking for locations and negotiating leases?

A. For a new tanning salon, I recommend that you start the leasing process at least six months in advance. Naturally this process can be completed quicker; however, quicker isn’t always better. For example, your site selection can take two months. You may need two to three months to negotiate the deal and finalize the Formal Lease Agreement. Budgeting another two to three months to design and build out the tanning salon space is quite reasonable. Almost every aspect of the leasing process takes longer than we expect, especially if you are trying to negotiate a great deal. It is much less stressful to plan for the inevitable delays.

Q. I have more than a year left on my lease. I either need to move my tanning salon or get a rent break. Is there anything I can do sooner as opposed to waiting for the lease to expire?

A. Frequently, we negotiate rent term lease reductions or early lease renewals at lower rental rates for commercial tenants. For example, we were just able to get one tenant a $7.00/square foot rent reduction plus a tenant allowance for required renovations – and we did this one year before the lease expired, with the lower rental rates taking effect immediately. It took a while, but I needed to convince the landlord that unless he cooperated with us now, the tenant would be moving at the end of the term. In a similar case where the landlord refused to be reasonable, the tenant relocated many months before the lease expired and we negotiated for the landlord to pay off the tenant’s old lease as part of the deal! When it comes to rent breaks, it pays to be creative.

Q. I am looking for a location to lease for my new tanning salon business. The property manager wants to see my business plan before he prepares a lease proposal. Should I show it to him?

A. I’m not a big fan of showing your business plan to the landlord before receiving or negotiating on the Offer to Lease. Remember – you are the customer. You are not applying for the privilege of leasing space in the building. Instead, the landlord should be pursuing you with financial inducements, free rent, tenant allowances and even a lower rental rate. If you do decide to share your business plan with the landlord, make this more generic versus specific (leave out the building’s name). This will strengthen your negotiating power as you will appear not to have emotionally committed to this location.

Q. What does NNN mean?

A. “NNN” refers to the Triple Net Expenses in the property. Triple Net Expenses are also known as Operating Costs and include property tax, insurance, maintenance, garbage removal and so on. As a tenant, you will be required to pay Triple Net Expenses, proportionate to your amount of your leased space. To clarify, if you lease 5 percent of space in a strip mall for your tanning salon, you will pay 5 percent of the mall’s Triple Net Expenses. Tenants typically pay two rents – the base rent and the Triple Net Expenses.

Want to see your leasing question in-print? 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/www.helpuleasetanning.com.