Commercial Lease Question

Discussion in 'Commercial Kitchen Rentals' started by domesticity, Feb 21, 2015.

  1. domesticity

    domesticity

    Messages:
    4
    Likes Received:
    10
    Exp:
    Home Chef
    Hello people,

    I'm about to sign a lease for a food place, it will be my first so I just want check with u guys if some of my future landlord request (according to first lease draft I got through his broker) are reasonable or at least industry standard?

    * A security deposit (knowing that would make a big dent into to my start up budget)

    * 12 month post dated checks. (can't those checks serve as security deposit)

    * Carry an insurance (on top of I would be paying for TMI)

    Insurance against damage by fire, lightning, tempest...............

    General Liability Insurance

    Thank you for your help.
     
  2. johncoombs

    johncoombs

    Messages:
    13
    Likes Received:
    10
    Exp:
    Professional Chef
    Hmmm... the 12 months post dated checks sounds not normal. I would go back to them and say if there is a security deposit then the checks are not needed or vice versa. About the insurance... not sure about which state your in and what your state requires but in tn the landlord provides insurance for the building. Of course you will have insurance to cover if you cause the damage but it should not be your responsibility to provide insurance that would cover the landlords building... its his building he gets to do that. Good luck!
     
  3. johncoombs

    johncoombs

    Messages:
    13
    Likes Received:
    10
    Exp:
    Professional Chef
    I would say be very clear or at least know who is responsible for the hvac and building repair and upkeep because that can definatly dig into your budget if you have to cover those...
     
  4. foodpump

    foodpump

    Messages:
    4,982
    Likes Received:
    535
    Exp:
    Professional Pastry Chef
    Let me make one thing perfectly clear, there is no such thing as a "industry standard lease".  Don't let anyone tell you different.

    You can't cook without a stove, and so you pay whatever it takes to get a good stove.

    Everyone who didn't pay for a lawyer to read through their lease wishes they did--what ever it would have costed.

    Get a lawyer to read the lease, whatever it costs.  Probably the best money you ever spent.
     
  5. domesticity

    domesticity

    Messages:
    4
    Likes Received:
    10
    Exp:
    Home Chef
    Thank for the advice everyone.

    It looks like some Landlords do request SD while others don't. And one or two months worth of rent as SD is commonplace among those whot request it.
    Thanks for the advice. Totally agree and that was my intention. I just wanted to get a feel of common practices among restaurant owners as I value those too.

    I heard about some restaurant space tenants asking Landlord to cover HVAC start up cost and I was just wondering if that would include the ventilation hood?
     
  6. foodpump

    foodpump

    Messages:
    4,982
    Likes Received:
    535
    Exp:
    Professional Pastry Chef
    Do not do this! Hvac is an infrastructure upgrade, you cant take it with you when your lease expires. Hvac can get very expensive. If a LL insists on hvac, get some accuate quotes and use that figure to negotiate a better lease
     
  7. jcakes

    jcakes

    Messages:
    302
    Likes Received:
    80
    Exp:
    Professional Pastry Chef
    As everyone else has suggested, get yourself a good lawyer (one that has lots of experience with commercial leases and food service/restaurants).  This will save you money in the long run.  Your lease will be worded correctly, there won't be any ambiguity, specifics will be spelled out (for example, my lease says I am responsible for maintaining the existing hvac by doing preventative maintenance - e.g., changing filters, but the landlord is responsible for repairs in prompt and timely manner so as not to interfere with my operation.  I specified that the hvac had to be delivered in good working order.)  HVAC doesn't mean hood ventilation or ansul - those are necessary for the operation of a food business, and the size/type is dictated by your local and/or state statutes,   That's your responsibility to install and maintain, not the landlord's unless you come to some other type of agreement as part of your negotiations.

    Post dated checks is very weird; and something that would make me curious about what they are thinking - and perhaps that they think your business will not survive?  My current lease asked for first, last and security deposit; my previous lease did not.  I negotiated 3 months free to allow for construction time so that is something you might want to negotiate.

    If you are doing construction in this space, talk to the local Board of Health first about your plans.  They might have local requirements that you (and the architect) didn't know about and you don't want to get halfway through construction and then have the BOH say they want the hand sink further down and that messes up your timeline and your budget.