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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 obligations

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

Landlord's obligations

  • 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.

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Rory MacDonald - Partner
Rory MacDonald - Partner
rory@mllaw.co.nz
+64 (9) 307 3324

Tim-Lewis-17-Jan-2013b.jpg

 

    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.
© MacDonald Lewis Law 2016 – All Rights Reserved

Contact

P: +64 9 307 3324
F: +64 9 307 3325

92 Parnell Road, Parnell,
Auckland 1052

DX CP 31534

PO Box 37851, Parnell,
Auckland, 1152

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Contact us

P: +64 9 307 3324
F: +64 9 307 3325

92 Parnell Road, Parnell,
Auckland 1052

DX CP 31534

PO Box 37851, Parnell,
Auckland, 1152