Negotiating and Drafting Restaurant Leases

Provisions Addressing Tenant Improvements, Financing and Franchise Structures, Mixed Use, Clean-up Equipment, and More

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


Conducted on Tuesday, April 2, 2019

Recorded event now available

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Program Materials

This CLE webinar will focus on drafting and negotiating provisions of restaurant leases. The panel will discuss how best to address particular 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 because of the expense of tenant improvements and operations, the impact of a restaurant tenant on other tenants, potential franchise affiliations, and using high-maintenance equipment.

Counsel should negotiate security deposits, guaranties, and letters of credit 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 on 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 panel 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. Insurance Provisions and Coverages
  5. Other provisions: Co-tenancy, go dark, termination provisions, parking, options to renew, insurance
  6. Subordination, non-disturbance and attornment agreements

Benefits

The panel 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 are the nuisance concerns to address in a restaurant lease?
  • What particular concerns exist in a mixed-use development and how might they be reflected in the lease?

Faculty

Rich, Jodi
Jodi Rich

Partner
Ulmer & Berne

In Ms. Rich's practice of real estate law, she represents buyers and sellers in the acquisition, sale, and...  |  Read More

Smith, Brian
Brian R. Smith

Partner
Arnall Golden Gregory

In addition to his general real estate practice, Mr. Smith has extensive experience in the negotiation of complex...  |  Read More

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