Small Business Development Center
Helping Businesses Start, Grow, and Prosper
If you are renting versus purchasing your location, knowing your landlord
and understanding the lease are extremely important. Some landlords have
been known to "cripple" a retailer's business through:
- restricting location and size of signs (note: but also
check with local zoning here, as it may be a zoning ordinance restriction
versus a landlord)
- foregoing or ignoring needed maintenance and repairs
(get a reference on the landlord from other tenants, preferably business
- renting adjacent retail spaces to incompatible or directly
- not investing in their property by maintaining a proper
appearance but rather "squeezing" the property for whatever
they can get
- not providing appropriate environmental needs(heat,
air conditioning, etc.)
to ask when obtaining a referral on your prospective landlord:
- Does the landlord return calls in a reasonable period and send appropriate service people quickly?
- Does the landlord just collect rent and disappear, or is he/she sympathetic to the needs of tenants?
- Does the landlord have any policies that hamper marketing innovations?
- Ask previous tenants what business they were in and why the left
did they fail or need to move?
- What support and hindrances did the landlord provide?
- If the opportunity presented itself, would they be retail tenants of this landlord again?
Here are some questions and thoughts that
should be addressed before committing to a lease:
- Do not sign a lease until you have gotten information
about future zoning plans and area masterplan. You don't want to open
your doors and find that the sidewalks are being replaced, your primary
access road is going under construction or the building is being scheduled
for major façade improvements.
- Based on your long term plans, how many years do you
want to be in this location, assuming the business performance is
- Will you be able to expand at this location
in the future?
- Is the lease flexible, is there an option to renew after
the first few years, does the rate stay frozen until renewal or is
there an annual adjustable rate..or is rate tied to sales volume?(check
with other merchants in area to see if you can find out the going
square footage rate or if "tied to sales volume," is the
- Put in writing the promises the property owner has made
about repairs, constructions, reconstruction, decorating/leasehold
improvements, alteration, and maintenance.
- Also, put in writing those areas that you as tenant
are responsible for
.maintaining sidewalks(snow, leaves, debris),
security systems, etc.
- Does the lease contain prohibitions against subleasing?
This could be important in the event you would like to "add"
a business line by providing space to a complimentary business or
if, you needed to close or move the business.