Business / Commercial

A Landlord's Guide to Leasing to Franchise Tenants

Created: Friday, 18 November 2016 13:58

Franchising is serious business in New Zealand. If you go to any mall in New Zealand you will find a number of the outlets are operated by franchise tenants. In fact there are probably more than you think.

To some extent, leasing to a franchise tenant is no different to leasing to any other commercial tenant. However, there are issues which a landlord should be aware of and take into consideration when leasing premises to franchisee.

Who is the tenant?

Often franchisors negotiate the terms of the lease but the tenant will be the franchisee. Other times franchisors will negotiate and enter into the lease either themselves or via a special purpose company specially set up to hold the lease and then they will sublease or licence the premises to the franchisee.

Topical Issues for Tenants When Negotiating Agreements to Lease

Created: Wednesday, 19 October 2016 12:00

Too often we are asked to review Agreements to Lease which have already been entered into by the parties. Of course this is too late. And it can be so disappointing because we can immediately see areas where we could have added value and even have saved our client money or reduced their risk. Of course there is a cost to having a lawyer review an agreement to lease but this does need to be weighed up against the long term and serious financial implications involved. A $100,000 per annum lease for a term of 10 years will be over a million dollar commitment not including the reinstatement obligations and the ongoing liability on assignment.

If you are a franchisor who is involved in the lease negotiation phase then you will appreciate the importance of making sure your lease negotiations are sound, as the terms of the lease can often be the difference between converting a franchise prospect into a franchisee or not.

We wanted to touch on a few areas in the lease negotiation phase which come up again and again and which have been highlighted by recent cases.

Health and Safety at Work Act 2015

Created: Tuesday, 12 July 2016 20:58

By now all business owners and workers will have an awareness of the Health and Safety at Work Act 2015 which came into force on 4 April 2016. We have produced a series of guides to assist business owners to understand their obligations and comply with the requirements of the Act.

The Flying Burrito Brothers, a sunset clause and a guarantee

Created: Wednesday, 24 February 2016 21:58

Sunset clauses and personal guarantees are commonly found in Agreements to Lease. A sunset clause allows a party to terminate an Agreement to Lease if certain events do not occur within a specified time frame. A requirement for a personal guarantee from the directors and the shareholders of the tenant company is also common place to give a landlord protection against the limited liability nature of a company. A recent High Court case has highlighted how important it is for a sunset clause is to be drafted carefully so it accurately reflects the intentions of both parties. It also serves as a timely remind of how crucial it is to ensure that the terms of any personal guarantee are in writing and signed by the guarantors.

New Zealanders not Welcome

Created: Tuesday, 23 February 2016 19:22

It seems our booming tourism industry exists despite itself. On the one side we have an industry asking New Zealanders to accept their overseas guests driving on New Zealand roads, that they cover the cost of screening those overseas guests for food items which could damage our agriculture industries and yet some members of that same industry refuse to accommodate those New Zealanders from whom it seeks those favours just because they are New Zealanders.