Commercial Leases for Franchisees

Commercial Leases for Franchisees

Commercial leases involving franchises have unique issues which make them much more difficult to negotiate than other types of leases. Franchise agreements typically establish certain standards for business properties as well as require approval of leases. Both franchisors and franchisees must conduct a careful review of commercial lease agreements to ensure compliance with the terms of the franchise agreement. Lusthaus Law provides comprehensive commercial leasing services including negotiating and drafting leases and advising clients regarding the requirements of the franchise agreement.

Complying with the Franchise Agreement

Lusthaus Law’s franchisee services include helping business owners negotiate traditional real estate provisions, as well as advising them on various real estate issues pertinent to the franchise relationship including those relating to:

  • Exclusivity relationships;
  • Collateral assignment and contingent options;
  • Franchisor purchase options;
  • Franchisor step-in rights; and
  • Renewal rights

As noted above, franchisees must take great care in reviewing lease terms. They often do not realize the scope of the franchisor’s right to require certain provisions in the lease. Often the franchisor’s requirements are problematic with landlords complicating negotiations for the franchisee. In addition, franchisees must ensure that the franchise agreement and the lease end at the same time and that the lease permits the franchisee to sell all current and future products and services as required by the franchisor.

For franchisors, Lusthaus Law reviews leases proposed by franchisees to provide the franchisor with necessary opportunities to protect its brand and the goodwill which will be developed at the location. The lease review will also seek to ensure that the franchisee can operate at the location in compliance with the franchisor’s system standards.

If you are a franchisee leasing property for your franchise or a franchisor reviewing the franchisee’s proposed lease, you need an attorney knowledgeable in both franchising and leasing law to assist you.

Lusthaus Law can help you with your commercial leases for franchises. Call us at 914-265-4100 for appropriate, accessible legal advice and counsel. Contact us today.