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Tenant Bargaining Power

Posted by Elizabeth Gore-Jones on 10 March 2020
Tenant Bargaining Power

Do tenants/lessees have more bargaining power in the face of the Coronavirus and challenging retail conditions?

The impending doom that is the Coronavirus would have us all believe that the malls, shops and streets are soon to be devoid of humans.

The downturn in the retail economy is well documented and much discussed.

The talk of an unavoidable recession is filling the airwaves.

Is this all doom and gloom or an opportunity to be grasped?

If a tenant/lessee has a suitable concept, enough cash in the bank to sustain them through the bad times and nerves of steel, then perhaps this is in opportunity to negotiate hard to secure lease deals in prime positions that were otherwise unavailable in more buoyant markets.

Not only may rent be more negotiable, but also terms of the lease, for instance a lease for 5 years may have a get out of lease free clause in the event the business does not perform or the economy does not recover as anticipated.  For example, an ability to terminate at year 2 in those circumstances.

Landlords may be willing to negotiate these previously rock solid clauses where it is better to have a bird in the hand rather than 2 (or none) in the bush.

If tenants/lessees want to take advantage of what may be an imbalace in bargaining power they should certainly seek legal and accounting advice to set them on the right path.

For more lease tips 6 Lawyer Secrets for Negotiating your Lease can be accessed at www.thefranchiseandbusinesslawyers.com.au under the heading "ebooks".

Disclaimer - this is not legal advice.  You should seek legal advice for your circumstances.

Author: Elizabeth Gore-Jones
About: Elizabeth specialises in franchising law. She lectures at Bond University PLA in franchising, she sits on the Queensland Law Society Franchising Committee, she is a past member of the Women in Franchising committee and a past member of the Franchise Council of Australia.
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Tags: Leases Business

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