Negotiating and Drafting Restaurant Leases

Tenant Improvements, Operational Issues, Franchises, Good Guy Guaranties and More

Recording of a 90-minute CLE webinar with Q&A


Conducted on Thursday, April 5, 2018

Recorded event now available

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Program Materials

This CLE webinar will focus on drafting and negotiating crucial provisions of restaurant leases. The panelist will discuss how best to address special concerns with a restaurant use, tenant improvements, franchise relationships, operational issues in mixed-use developments, and issues applicable to tenants generally.

Description

Restaurant leases present particular issues for landlords and tenants due to the high cost of tenant improvements and operations, the impact a restaurant use can have on other tenants within a project, potential franchise affiliations, and the use of high maintenance equipment.

Security deposits, guaranties, and letters of credit should be negotiated with an understanding of the capitalization and franchise structure of a restaurant tenant. If a restaurant defaults on its lease, a restaurant lender will want to foreclose upon equipment and furnishings that secured the lender’s loan.

If the tenant is a part of a restaurant chain and defaults under its franchise agreement, the franchisor may want the ability to take back the space and either operate the restaurant or assign the lease to another operator.

Restaurant leases must also address issues common to other tenants, such as permitted and exclusive uses in a center, co-tenancy and right to go dark, operating expenses, termination provisions, parking, options to renew, insurance and mutual waivers of subrogation. These issues are of heightened importance when a restaurant is considered an anchor in a retail development.

Listen as our panelist discusses the legal and practical concerns with restaurants and how they impact the drafting and negotiation of restaurant leases for both the landlord and the tenant.

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Outline

  1. Restaurant tenants generally: distinguishing features
  2. Tenant improvements/buildout provisions
    1. Allocation of responsibility between landlord and tenant
    2. Equipment and furnishings—lender rights upon lease or loan default
  3. Franchised (chain) restaurants—rights of franchisor upon default under lease or franchise
  4. Other provisions: co-tenancy, go dark, termination provisions, parking, options to renew, insurance
  5. Subordination, non-disturbance and attornment agreements

Benefits

The panelist will review these and other key issues:

  • How do the operational aspects of a restaurant impact provisions in a restaurant lease?
  • Given the expense of a restaurant buildout, how might financing arrangements impact the lease?
  • How might a franchise affect the notice and assignment provisions of a restaurant lease?
  • What nuisance concerns should be addressed in a restaurant lease?
  • What special concerns exist in a mixed-use development and how might they be reflected in the lease?

Faculty

Margolis, Jeff
Jeffrey A. Margolis

Founder
Margolis Law Firm

Mr. Margolis has represented domestic and foreign clients in connection with acquisitions and sales of all types of...  |  Read More

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