COFFEE SHOP LEASING

SHAZZ22

Hi everyone,
I am opening a coffee shop franchise. its an empty unit at the moment and i am going to fit out all equipment. My issues is that the landlord doesn't want to put my name on the lease instead he wants to put my franchisee name on it. I am investing all money for the coffee shop. Is there anything i should be worry about or is there any disadvantages of it. Please reply if anyone knows as i am worried that all my investment can be taken over by someone else in future.

duploelabs

SHAZZ22 wrote: »

Hi everyone,
I am opening a coffee shop franchise. its an empty unit at the moment and i am going to fit out all equipment. My issues is that the landlord doesn't want to put my name on the lease instead he wants to put my franchisee name on it. I am investing all money for the coffee shop. Is there anything i should be worry about or is there any disadvantages of it. Please reply if anyone knows as i am worried that all my investment can be taken over by someone else in future.

I've no experience in this but surely the agreement of the franchise, including the use of their name, is between you and the franchiser and nothing to do with the landlord.

Walter2016

I would guess that the lease would be invalid as you would not be a director of the franchise company. The landlord's solicitor won't allow it anyway.

The may be able to put "Shazz22 t/a ABC coffee co"

I owuld guess that the landlord is planning to sell the unit at some stage or use it as collatoral for a loan and having a well known name as the tenant would give a higher value to the building.

SHAZZ22

I will try with the landlord again to find out the reasons.
Thanks

mrawkward

I would say the reason is the landlord wants a lease with the occupier, not some sub-lessee over whom he has little control. Many landlords, including me!, do not permit sub-lets on short term leases.

DubTony

mrawkward wrote: »

I would say the reason is the landlord wants a lease with the occupier, not some sub-lessee over whom he has little control. Many landlords, including me!, do not permit sub-lets on short term leases.

But the occupier would be the OP, not the franchisor. It seems the landlord might be a bit confused as to who he's doing business with.
Having said that, if it's a Subway shop, don't they insist on having an interest in the lease?

SHAZZ22

I am going to run the coffee shop and only using franchisee name. Is there anything which we need to be concerned for? As lease would be on franchisee name not on my name.

mrawkward

The owner of the franchise = franchisor
The one who opens the local unit under licence of the franchisor = franchisee.

DubTony

SHAZZ22 wrote: »

I am going to run the coffee shop and only using franchisee name. Is there anything which we need to be concerned for? As lease would be on franchisee name not on my name.

There seems to be some confusion here. mrawkward has corrected your interpretation of the words franchisee and franchisor so using the correct titles this time can you tell us exactly what the landlord has asked for.

Here's why I ask.
If I get an Insomnia franchise, you can be damned sure that Bobby Kerr doesn't want his name or the name of his company on the lease. This would leave him/his company exposed to legal action if the business fails and the rent isn't paid.

Does the landlord want to create the lease (if none already exists) in the name of "Your Name trading as Coffee Shop Franchise""? If he does, you'll need to get permission from the franchisor to use their name on the lease in that manner. That will mean their legal people looking over the lease to ensure there's no exposure to them and could cost you more in legal fees.

The lease should be in the name of the person/company who occupies and carries out business in the building. Your franchisor will not be running a business at that location. You will. They're simply your supplier.

Please clarify.

SHAZZ22

Thanks Tony. Landlord asked my franchisor name on lease. But i am going to run the business as a franchisee. Would that be ok if name on lease would be my franchsior instead of me ????

mrawkward

Is your franchisor willing to do this? If so, You will need a sub-lease and permission for same from the landlord. You will need to take legal advice to make sure of your security of tenure...you will have a lot of money tied up in the building. Etc

betterman

I cant seem much problim and heres why
1 when you sign up with the franchis it would state on the contract who and where the franchise will be operating out of.
2 you will be responsible for the property leese agreements regardless whos name is on the lease ie insomnia trading along side mr john smith or something like that
And you would not put the franchis name into disrepute. I am not a legal expert so you would needto seek legal advice. But thats just my thoughts

antoinolachtnai

It is a completely different proposition if the franchisor is on the lease. Your franchisor might not be interested in this because they will essentially be guaranteeing the lease. On the other hand they might be, if they want to 'protect' the location for their brand. As I recall, this is the way the original O'Brien's were structured (Franchisor took lease and sublet to franchisee and this led to its demise when the economy turned and sublessees didn't pay rent.)