Can I sublease or assign my commercial rental property?

Posted on January 29, 2016 by mboxerman

As a business owner who might sell your operation in the future, you must have the right to sublease the premises or assign your lease.  To preserve your right to sublease or assign, you must avoid leases with overly restrictive sublease and assignment provisions that severely limit your ability to sell your business. Make sure your lease provides that the landlord will not unreasonably withhold, condition or delay consent to a proposed subtenant or assignee. Also, be sure to eliminate any provision that permits the landlord to terminate the lease, or recapture the premises, rather than consent to a proposed sublease or assignment.

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What are some red flags in commercial leases?

Posted on January 29, 2016 by mboxerman

Commercials leases are far more complex than residential leases.  So, it is important to carefully read the proposed lease terms offered by your potential landlord and to advocate for adjusted terms that are tailored to your needs.  While there is no one term that makes or breaks the desirability of a commercial lease, there are some commonly negotiated terms that you should take a careful look at before signing your agreement:

  • Sublease and assignment restrictions
  • Relocation provisions
  • Demolition clauses
  • Exclusivity and permitted use clauses
  • Continuous operation requirements
  • Square footage calculations
  • Common area maintenance fees
  • Personal guarantees and
  • Landlord’s liens.

More information about these lease terms is available throughout the rest of our FAQ.  If you have any questions, contact us at (312) 216-2720 or info@marcusboxerman.com.

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How can I avoid paying too much commercial rent?

Posted on January 29, 2016 by mboxerman

Lowering your commercial rent is possible if you follow a few simple steps.  First, choose a sensible location.  Then, call an experienced real estate attorney to go over the terms of the proposed commercial lease.  A knowledgeable attorney can help you understand the consequences of the lease terms and identify opportunities and pitfalls before zealously negotiating with your potential landlord to obtain a favorable agreement.

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How do I choose the right business location?

Posted on January 29, 2016 by mboxerman

When you’re choosing a new business location, start by considering your business’ specific needs.  It is always tempting to choose a high-profile location, but, for some businesses, the exposure isn’t worth the price.

First, think about how important location is for your business.  Some businesses, like most restaurants and retail stores, rely heavily on foot traffic.  Those businesses need prominent locations because they count on customers coming in after spotting their signs and storefronts.  Other businesses don’t need much foot traffic and may benefit more from a less prominent spot with more affordable rent.  It comes down to a cost-benefit analysis.

Also, consider which areas and buildings are appropriate for your industry and your specific business.  Do customers in your target market live and work in the area?  Are there competitors located in the same shopping center?  Do other area businesses complement the products or services you provide?  Your business doesn’t operate in a vacuum, so it’s important to look into a rental space’s surroundings before you sign a lease.

In many cases, a variety of rental spaces will meet your business’ needs.  When that’s true, you ultimate choice should depend on the terms offered by prospective landlords.

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Are commercial lease terms negotiable?

Posted on January 29, 2016 by mboxerman

Yes.  Commercial lease agreements are made up of many components, almost all of which are negotiable depending on your degree of bargaining power.  Even if the landlord won’t budge on the rent, there are plenty of terms that may be altered to make the lease more favorable to the tenant.

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What is a commercial lease?

Posted on January 29, 2016 by mboxerman

A commercial lease is a contract between a landlord and a business for the rental of a building space or other commercial property.  Commercial leases are more complex than residential leases because their terms are negotiable and vary considerably from lease to lease.

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What steps should I take before terminating an employee?

Posted on December 11, 2015 by mboxerman

Terminating an employee is never pleasant, especially if you’re worried about a potential lawsuit. Be sure to review this checklist to best avoid unnecessary litigation and to help ensure you are prepared to defend against a claim for unlawful termination or unemployment compensation.

Review Any Applicable Employment Contracts. Under Illinois law, absent an agreement to the contrary, all employees are “at will,” meaning you are free to terminate an employee for any non-discriminatory reason. The at-will status, however, may be altered by a written or oral agreement. If you have an employment agreement with an employee, make sure your termination does not violate that agreement.

Review Your Employee Handbook. Your employee handbook may restrict your ability to terminate. Many employee handbooks set out an employer’s discipline practices. If your handbook sets forth a progressive disciplinary policy, make sure you’ve followed the policy. Also, check to see whether your handbook provides that certain offenses are not grounds for immediate termination.

Investigate Charges of Employee Misconduct. Don’t fire an employee before you find out what really happened. Make sure you or your manager perform a reasonable investigation. Obtain signed statements from all witnesses and listen to all sides of the story – including the employee’s – before you make a decision. To ensure fairness, make your decision to terminate calmly, not in the heat of the moment.

Document the File. Keep careful, detailed records of all employee misconduct, disciplinary actions and performance issues and reviews. Before you terminate, make sure the employee file has enough information to support termination, or make sure you can explain any lack of documentation.

Determine Whether the Employee Received Sufficient Warning. Before terminating, ask yourself the following questions: Is the employee familiar with company expectations and disciplinary policies? Has the employee received previous warnings based on the same or similar behavior? Should a reasonable employee know that this behavior would result in termination? If you answer “yes” to these questions, your employee should not be surprised about your decision to terminate, and your decision looks objectively reasonable. If you answer “no” to any of these questions, consider suspension instead of termination.

Get a Release. Gain peace of mind with a severance agreement and general release. A severance agreement provides an employee with a severance package (i.e. additional payment and/or benefits) in exchange for a release of claims, protecting you from a lawsuit. Severance agreements must be entered voluntarily, and the employee should be given a chance to review the agreement with an attorney before signing.

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Should I franchise my business? How should I decide?

Posted on December 3, 2015 by mboxerman

Franchising is often a fast, efficient, and effective method of expanding an existing business. Businesses in over 120 different industries have used the franchise model to facilitate growth, and it’s easy to understand why.  When you franchise your business, franchisees take on the burden of investing in and opening new locations. Franchisees speed your business growth, taking on the day-to-day operations so you can focus on big picture issues such as increasing the value of your brand.  However, the answer to “should I franchise my business” is not always “yes.”

Franchising is not right for every business.  It carries some inherent risks and important considerations that prospective franchisors should consider before deciding it’s time to expand. When you’re asking “should I franchise my business,” here are some questions that can help you decide:

  • Has your existing business been financially successful?
  • Can you offer potential purchasers a unique and enticing product and business system?
  • Can potential purchasers rely on you to continue to provide new and innovative products that compliment your core business?
  • Can your past success be replicated in new markets and with new management?
  • Can you easily teach someone else how to operate your business system in less than three months?
  • Will your business be so lucrative for potential purchasers that it makes financial sense for them to choose you over the competition?
  • Are you ready to build relationships with your franchisees and provide a support system dedicated to their success?
  • Can you afford the new investment that franchising a business requires?

Each of these questions mandates careful consideration. If you are unsure of how to analyze these issues or you think you are ready to proceed, then it’s time to reach out to a skilled franchise lawyer who can assess your business and help you successfully transition into the world of franchising.

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What Is franchising?

Posted on December 3, 2015 by mboxerman

Franchising is a method for expanding a business and distributing goods and services through a licensing relationship that allows a franchisee (the person or company granted a license) to operate a business under the franchisor’s (the person or company granting the license) trademarks, trade name and business model in exchange for payment. The franchisor specifies the products and services that are offered by the franchisees and provides them with an operating system, brand and support.

From a customer’s perspective, franchises look the same as any other chain of businesses.  From a business perspective, franchises and independent businesses operate very differently.  The contractual relationship between the franchisee and franchisor leaves the franchisor in charge of the brand while the franchisee actually operates the franchise location and provides services to customers day-to-day.  Ideally, the franchise relationship benefits both parties.  When done well, franchising makes it easier for the franchisee to succeed in opening a new business and gives the franchisor the support it needs for fast, efficient and cost-effective brand expansion.  More details about the costs and benefits of choosing a franchise are available in the rest of our FAQ.

Franchising most often takes one of two forms. The most common, Business Format Franchising, describes a situation where the franchisor provides the franchisee an entire system for operating the business, including the franchisor’s trade name and products and services. Less common, but more robust in terms of total sales, is the Product Distribution Model. Under the Product Distribution Model, the franchisor provides the franchisee with manufactured products, but the franchisee is responsible for determining the business system and for following through on selling the franchisors’ products.

If you’re considering purchasing a franchise, or franchising out your existing business, contact an experienced franchise lawyer to discuss which model suits your unique business environment.

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What happens to my franchise when I retire or pass away?

Posted on December 3, 2015 by mboxerman

In the 1980s, the franchise business model experienced something of a market bubble. But now, franchisees that started their businesses during the bubble are beginning to retire, or in some cases, pass away. What happens when a franchisee retires or dies depends on your state law and your unique franchise agreement. Some states require franchisors to give surviving spouses and heirs a sort of “trial run” for a reasonable period of time after the franchisee’s death. Other states disallow any restriction on the right to succession in the franchise agreement. Illinois law is silent on the issue of succession, making it paramount that you consult with a franchise lawyer to review and negotiate your franchise agreement.

Most franchise agreements contain provisions that give the franchisor the right to veto a potential successor’s ownership of the franchise. If you want your family to retain your franchise after your retire or pass away, it is important you plan ahead. A skillful franchise lawyer can combine franchise agreement negotiation and estate planning tools to optimally position your franchise for succession.

If you have questions about what will happen to your franchise after you retire or pass away, contact Marcus & Boxerman at info@marcusboxerman.com or (312) 216-2720 to get answers.

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