An easy checklist to follow when negotiating a lease for your business location

The following are steps you should take when negotiating a lease for your company’s business location.  This is advice from well seasoned entrepreneurs willing to share their secrets.  Be sure to get to a fair deal, and one that will benefit your company in the long run:

  • Thoroughly understand leasing terms and concepts. Speak to your accountant and lawyer for clarification of your questions or concerns.
  • Determine your overall criteria regarding the ideal location, the amount of money you are prepared to spend and other factors.
  • Thoroughly research potential locations and short list them to three locations, if at all possible. Any one of these locations should be acceptable to you. Prepare a list of your questions and concerns that are to be answered by the landlord or the landlord representative.
  • Obtain all documents required to assess the three locations. This includes a copy of the lease, building plans, if the building is being constructed and other information that your lawyer or accountant may request of you.
  • Review the documentation yourself and determine your priority in terms of your preference of location.
  • Set up a meeting with your lawyer and accountant and discuss the prospective premises.
  • Decide on your negotiating position regarding terms after your consultation with your professional advisors.
  • Decide whether you are going to do the negotiating or have your lawyer do the negotiating on your behalf. If it appears tactically advantageous for you to do the negotiating then make sure your game plan is well thought out in advance. If you involve your lawyer, it is common for the other side to involve its lawyer in the negotiating stage, especially in the case of negotiating legal terms in the agreement.
  • Submit your offer to lease in detail with the formal lease attached, with any suggested modifications.
  • Advise the agent that your are seriously considering other premises and if they are not serious about agreeing with your terms then you will have no alternative but to take your business elsewhere. If you say this, make sure that you mean it and would be prepared, if necessary, to walk away from the deal.
  • Put pressure on the agent and the landlord in terms of placing a deadline on accepting the offer to lease. The deadline could be two or three days, or longer, depending on the circumstances. A major Canadian property management company or landlord may require the documents to be approved at head office and this could take a longer period of time. In general, the offer should not be open for any longer than a week, the shorter the better. Placing a deadline implies to the landlord that you are serious about going elsewhere if agreement cannot be reached.
  • If the landlord does not accept the offer, or if a counter offer is made to you and you are not in agreement with it, then try the next location on your priority list. This approach will eventually get you the location and lease terms that you want. Do not hesitate to use your accountant and lawyer to assist with lease negotiations. This money will be well spent and you will have peace of mind knowing that your decision is based on expert advice.

The location of your business is critical to its success. There are many different types of locations. Some may be suitable for a viable business and some may not. Other considerations are the quality of the building and the nature of the relationship with the landlord. The terms of your lease and how effectively you negotiate it will make a big difference in your future profit picture. You also need flexible options if the location does not work out for you, you do not need the space, or if you health or partnership problems and want to get out of the lease. There are various types of leases to consider. Obtain an experienced business lawyer to assist you in negotiations and in checking all terms of the lease. This is money well spent for peace of mind.