Unless you are purchasing the premises from which you will operate your franchise business, you will most likely need to sign a franchise lease in addition to your franchise agreement. A lease is an important document and you should always seek legal advice before signing a lease, as it may lock you in for, usually, between one and three years. There are additional considerations to consider in the case of a franchise lease.
Whilst it might seem obvious, it is important to consider in whose name to put the lease. Depending upon whether the lease is in your name personally, in the name of your business entity, or in the name of the franchisor, with you as a sub-lessee, will have significant implications. You should speak to a legal professional to understand the consequences of different arrangements for your franchise in the future.
Lease assignment clauses are another important consideration in a franchise lease. If you ever intend to exit the franchise, your ability to do so and to pass the franchise on to another person will be influenced by the ease of assigning the lease. This depends upon the particular terms of the lease.
A lease assignment clause can restrict the ease with which you can assign the lease, and consequently the franchise. You should ensure that any lease assignment clause requires that the landlord automatically grants a full assignment to any incoming franchisee and releases you from any obligations.
In addition to these specific franchise lease aspects, you need to consider all the usual aspects of a lease. Some of these factors are:
- The term of the lease and options to extend
- Commencement date
- Early termination
- Permitted use
- Exclusive use
- Business hours
- Charges for maintenance of common areas
- Personal guarantee
If you would like to obtain legal advice on a franchise lease, Caven can put you in touch with a local specialist franchising solicitor free of charge. So, if you have any questions or would like our help in finding a local franchising solicitor please call us on 08001 221 2299 or complete the web-form above.
- Last Updated on 02/03/2010