Restaurant Leases: Emerging Trends and Developments

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

This program is included with the Strafford CLE Pass. Click for more information.
This program is included with the Strafford All-Access Pass. Click for more information.

Conducted on Thursday, March 10, 2022

Recorded event now available

or call 1-800-926-7926
Course Materials

This CLE course will focus on drafting, and negotiating provisions of restaurant leases and how drafting and negotiating have changed due to the pandemic. The panel will discuss how best to address particular concerns with restaurant use, closures, and partial closures due to COVID, pivoting the business model and documenting in the lease agreement, tenant improvements, franchise relationships, operational issues in mixed-use developments, and issues applicable to tenants generally.

Description

Restaurant leases present unique issues for landlords and tenants beyond those for retail use; including, among other matters, the high cost of tenant improvements and operating the business, the impact of a restaurant tenant on other tenants, potential franchise affiliations, high-maintenance equipment, and the disproportionate impact of COVID on their operations.

If the restaurant is part of a multi-use project, then counsel should understand the scope of the project and stage of development. Counsel should negotiate security deposits, guaranties, and letters of credit to understand 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.

When 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. The franchise agreement may require specific terms in the lease that may be objectionable to the landlord.

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 subrogation. These issues are of heightened importance when a restaurant is considered an anchor in retail development and has experienced new "twists" in the age of COVID.

Listen as our expert panel discusses drafting and negotiating provisions of restaurant leases and how drafting and negotiating has changed due to the pandemic. The panel will discuss how best to address particular concerns with restaurant use, closures and partial closures due to COVID, pivoting the business model and how these changes can be documented in the lease agreement, tenant improvements, franchise relationships, operational issues in mixed-use developments, and issues applicable to tenants generally.

READ MORE

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, and how have these evolved in the past two years?
  • What are the concerns for a mixed-use development, and how might they be reflected in the lease?
  • Given the expense of a restaurant buildout, how might financing arrangements impact the lease?
  • How might a franchise agreement affect the provisions of a restaurant lease and the buildout process?
  • What are the nuisance concerns to address in a restaurant lease?

Faculty

May, Bruce
Bruce B. May

Member
Jennings, Strouss & Salmon

Mr. May has counseled sophisticated local, national, and international owners, developers, lenders, and investors in...  |  Read More

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

Access Anytime, Anywhere

Strafford will process CLE credit for one person on each recording. All formats include course handouts.

To find out which recorded format will provide the best CLE option, select your state:

CLE On-Demand Video

Download