1851

Entering a&nbsp;<a href="https://1851franchise.com/essential-lease-negotiation-tips-for-franchisees-2725451">lease agreement</a> is one of the most critical decisions a franchisee makes. Your lease terms can directly impact your&nbsp;<a href="https://1851franchise.com/unraveling-franchise-earnings-how-much-can-you-really-make-2723935">bottom line</a> and long-term success, making it essential to negotiate wisely and prioritize protective clauses. 1851 Franchise spoke with several industry experts to gather insight into how to approach franchise lease agreements and protect your investment.<h2>Key Clauses to Prioritize</h2>When negotiating a lease, franchisees should focus on clauses that address financial responsibility and provide long-term flexibility.&nbsp;<a href="https://www.linkedin.com/in/raetzer?utm_source=1851franchise.com&utm_medium=article&utm_campaign=negotiating-franchise-lease-agreements-and-protecting-your-investment-2728232" target="_blank" rel="nofollow">Joseph J. Raetzer</a>, president of&nbsp;<a href="https://raetzer.com/?utm_source=1851franchise.com&utm_medium=article&utm_campaign=negotiating-franchise-lease-agreements-and-protecting-your-investment-2728232" target="_blank" rel="nofollow">Raetzer Consulting</a>, emphasizes the importance of carefully crafted provisions.“Focus on clauses that impact responsibility,” Raetzer said. “HVAC maintenance/repair and plumbing/drainage issues, for example, are two big ones that can impact your bottom line. There’s nothing like an unexpected $15,000 bill to replace a commercial HVAC system to make for a bad quarter!”Raetzer recalls a case where drainage issues caused significant operational challenges for a retail store. Thanks to a drainage provision negotiated during the lease, the landlord covered the cost of core drilling and rerouting drainage pipes, saving the franchisee substantial expenses.<h2>Avoiding Common Lease Negotiation Mistakes</h2>Franchisees often make costly errors during lease negotiations.&nbsp;<a href="https://www.linkedin.com/in/robbiecrosier?utm_source=1851franchise.com&utm_medium=article&utm_campaign=negotiating-franchise-lease-agreements-and-protecting-your-investment-2728232" target="_blank" rel="nofollow">Robbie Crosier</a>, partner at&nbsp;<a href="https://www.pkclegal.com/?utm_source=1851franchise.com&utm_medium=article&utm_campaign=negotiating-franchise-lease-agreements-and-protecting-your-investment-2728232" target="_blank" rel="nofollow">Peters Kussmaul Crosier PLLC</a>, highlights the financial pitfalls of not fully understanding terms.“A common mistake is failing to understand the financial implications of CAM [common area maintenance] charges, which can lead to unexpected costs,” Crosier said. “Another frequent issue is not negotiating for tenant improvement allowances, leaving franchisees to shoulder expensive build-out costs.”Additionally, Crosier warns about relocation clauses, which allow landlords to move tenants at their discretion.“Missteps like agreeing to relocation clauses or overlooking unclear financial terms can destabilize a franchise and hurt its growth potential,” he said.<h2>The Importance of an Exit Plan</h2>Even with the best planning, unforeseen circumstances may require franchisees to terminate or relocate their lease early.&nbsp;<a href="https://www.linkedin.com/in/adam-g-hamilton/?utm_source=1851franchise.com&utm_medium=article&utm_campaign=negotiating-franchise-lease-agreements-and-protecting-your-investment-2728232" target="_blank" rel="nofollow">Adam Hamilton</a>, co-founder of&nbsp;<a href="https://www.reihub.net/?utm_source=1851franchise.com&utm_medium=article&utm_campaign=negotiating-franchise-lease-agreements-and-protecting-your-investment-2728232" target="_blank" rel="nofollow">REI Hub</a>, underscores the necessity of including an exit clause to protect your investment.“If you have to shut down your business early, yet you are stuck in your lease for several more months without being able to do anything about it, that will force you to take a major financial hit,” Hamilton said. “It’s wise to get an exit clause in there, such as allowing subleasing if necessary.”This type of clause ensures franchisees have options to mitigate financial losses, preserving their ability to pivot if circumstances change.<h2>The Power of Strategic Negotiation</h2>A&nbsp;<a href="https://1851franchise.com/how-to-master-lease-negotiations-in-the-franchising-industry-2718812">well-negotiated lease</a> can significantly enhance a franchisee’s success. Raetzer shares an example of a client who was opening a franchise in a historic building. The lease initially required the franchisee to handle costly architectural drawings for a blade sign. By negotiating, Raetzer secured a clause requiring the landlord to provide the drawings and handle the application for a small monthly fee.“The client was thrilled they got their blade sign, which directly impacts visibility to customers,” Raetzer said.<h2>Seek Professional Support</h2>The complexities of lease agreements make engaging experienced professionals essential. A&nbsp;<a href="https://1851franchise.com/protecting-your-brand-why-partnership-with-a-franchise-attorney-is-essential-for-franchisors-2726954">franchise attorney</a> or lease consultant can identify hidden risks and negotiate terms that align with your long-term goals.&nbsp;“Engaging an experienced attorney ensures risks are addressed and that the lease aligns with the franchisee’s long-term goals,” said Crosier.By taking these steps, franchisees can negotiate lease agreements that not only protect their investments but also position their businesses for sustained success.Growing and selling franchises is difficult. No great franchise did it alone. Want to learn more about how 1851 helps franchisors grow their franchises with confidence? Visit&nbsp;<a href="https://www.1851growthclub.com/?utm_source=1851franchise.com&utm_medium=article&utm_campaign=negotiating-franchise-lease-agreements-and-protecting-your-investment-2728232" target="_blank" rel="nofollow">www.1851growthclub.com</a> and see what we can do for you.

Negotiating Franchise Lease Agreements and Protecting Your Investment

Negotiating Franchise Lease Agreements: Protecting Your Investment

1851 Franchise

From avoiding costly repairs to prioritizing an exit clause, here are key strategies for negotiating franchise lease agreements that protect your investment and set your business up for success.

negotiating-franchise-lease-agreements-and-protecting-your-investment

Paris Baguette Canada

Photo of exterior of a Paris Baguette location

How Much Can I Make as a Paris Baguette Franchisee?

paris-baguette-franchise-disclosure-document-analysis

Busy Bee Jumpers

Busy Bee Jumpers: Where Proven Success Meets People-First Franchising

busy-bee-jumpers-franchise-culture-success

busy-bee-jumpers-consumer-positioning-image-kids-jumping-bounce-house

Delivering Fun With a Smile: How Busy Bee Jumpers Earns 5-Star Raves From Families Across New England

busy-bee-jumpers-party-rentals

busy-bee-jumpers-franchise-positioning-image

Bouncing Into Business: How Busy Bee Jumpers Is Building the First National Bounce House Franchise

franchise-opportunity-busy-bee-jumpers-franchise

Layne's Chicken Fingers

Photo of exterior of Layne's Chicken Fingers restaurant

Layne’s Franchisees Capitalize on First-To-Market Advantage in Chicken Finger Frenzy

laynes-franchise-first-mover-advantage

Buying a Franchise Masterclass

 Franchise Opportunities

Get Support Buying a Franchise

How to Buy a Franchise White Paper

How to Buy a Franchise

How to Sell Franchises

How to Grow a Franchise

Find a Franchise Supplier

1851 Franchise Opportunities

Franchisor News

Franchisor Power Rankings

FranCamp Mastermind Summit

Franchise Resources

What ALEC-Laffer's Report Means for Franchising

Website Awards

Power Rankings

About 1851

Advertise on 1851

Contact 1851 Editorial

Terms of Use

1851 Login

GROWTH CLUB LOGIN

facebook

instagram

twitter

linkedin

youtube

Homebuyers Keep Buying — And That’s Good News for Home Service Franchises - 1851 Franchise

Homebuyers Keep Buying — And That’s Good News for Home Service Franchises

homebuyers-keep-buying-and-thats-good-news-for-home-service-franchises

AI Could Push Unemployment to 20% — Fueling a Surge in First-Time Franchise Buyers - 1851 Franchise

AI Could Push Unemployment to 20% — Fueling a Surge in First-Time Franchise Buyers

ai-unemployment-impact-white-collar-job-loss

How To Sell Just One Franchise: What You’ll Learn at FranCamp NJ 2025

how-to-sell-just-one-franchise-what-youll-learn-at-francamp-nj-2025

House Passes Tax Relief Package With Key Benefits for Small Businesses and Franchises

house-passes-small-business-tax-relief-bill-2025

McDonald’s To Hire 375,000 Workers as It Prepares for Major U.S. Expansion

mcdonalds-to-hire-375000-workers-as-it-prepares-for-major-us-expansion

franchise supplier award design with Locate AI logo and 1851 Franchise badge

Franchise Real Estate Services | Locate AI — Emerging Leaders in Franchise Support

locate-ai-emerging-leaders-in-franchise-support

The Ultimate Guide to Selling Franchises: How to Position Your Value Proposition

The Ultimate Guide to Selling Franchises: How to Position Your Value Proposition — Point of Differentiation

how-to-position-your-value-proposition-with-a-point-of-differentiation

Ultimate Guide to Selling Franchises: How To Build a Successful PR Campaign

ultimate-guide-to-selling-franchises-how-to-build-a-successful-pr-campaign

Guide To Selling Franchises: How To Set the Right Expectations

guide-to-selling-franchises-how-to-set-the-right-expectations

The Top 20 Handyman Franchises To Invest in for 2025

top-handyman-franchises-to-invest-in

How Car Sales Taught Buddy's Home Furnishings’ Mitchell Lee the Secrets of Franchise Development

how-car-sales-taught-buddys-home-furnishings-mitchell-lee-the-secrets-of-franchise-development

The Top 20 Cleaning Franchises to Invest in for 2025

top-cleaning-franchises-to-invest-in

Affordable Franchise Opportunities: Exploring Low-Cost Home Service Franchises Under $50K

affordable-franchise-opportunities-exploring-low-cost-home-service-franchises-under-50k

franchisee spotlight graphic with photo of Brianna and Matt Fitchett, Seniors Helping Seniors logo

Nonprofit Leaders to Bring Seniors Helping Seniors® Franchise to East Bay, California

nonprofit-leaders-to-bring-seniors-helping-seniors-franchise-to-east-bay-california

franchisee spotlight graphic with photo of Abid Khan and Paris Baguette logo

Longtime Tim Horton’s Franchisee Signs 4-Unit Agreement with Paris Baguette in Toronto

longtime-tim-hortons-franchisee-signs-4-unit-agreement-with-paris-baguette-in-toronto

Negotiating Franchise Lease Agreements and Protecting Your Investment

MORE STORIES LIKE THIS