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LEASE AGREEMENT REFERENCE GUIDE 950: STRATEGIES FOR SELLING THE RETAIL BUSINESS $24.95


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Lease Strategies
950

Product Overview

This LARG contains the following items:

The Retail Tenant's Wish List for Selling the Business, The Pro-Tenant Sale of the Business Clause, and the Lease Clause Critique: An Agreement for a New Lease to Facilitate the Sale of the Tenant's Business.

Number of Single Spaced Pages: 12

 

Excerpt

The Retail Tenant’s Wish List for Selling the Businesst

 

After the warm glow of Christmas sales wears off, the retail tenant stares at the longest thirty one days on its calendar. It’s called the month of January. That month in particular is like the "morning after" following the company Christmas party. It's the time to handle exchanges of merchandise, and to entertain serious thoughts of relocating to Hawaii. It's also the time retail tenants dream about selling the business, and putting the cash in the bank.

In the sale of an established retail business—whether it's a chain store operation or a mom and pop concern—the location of the retail real estate involved is usually one of the most important factors motivating the buyer to make the deal. When the retail space is leased (as opposed to owned by the tenant), the landlord becomes a mandatory participant in the sale, since the landlord's approval is customarily required for assignments or subleases of the tenant's lease to third party purchasers. If the buyer intends to operate the business in the same location (which is normally the case), an assignment or sublease of the lease for the store becomes an indispensable part of the documentation for the sale. It is what the tenant needs to be able to deliver possession of the real estate to the buyer of the business.

Related Landlord Approval Rights

The landlord's right of approval of lease transfers is normally imposed upon the tenant in pro-landlord retail leases by comprehensive assignment and subleasing clauses which require the transfer of any interest in the lease to be approved in advance by the landlord. But the landlord’s ability to control the sale of the tenant’s business generally goes well beyond the right to approve lease transfers. Shopping center landlords also exercise substantial control over numerous related issues crucial to the sale of an ongoing business by the tenant.

Such related issues can include the prohibition of the following without the landlord’s prior written consent:

  • Changes of the tenant’s trade name;
  • Changes of use in the premises;
  • Changes of the tenant’s exterior signage;
  • Changes of interior displays or signage visible from the exterior of the premises; and
  • Alterations to the premises to accommodate a buyer’s new leasehold improvements.

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