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  1. #1
    Junior Member
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    Apr 2007
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    Lease negotiation and landlord proposal

    Hi Everyone,
    I am in the process of opening a coffee bar and am slowly narrowing down options for locations. I have found a couple that I am interested in. As the lease negotiation gets underway, I am wondering what the prospective landlord will want from me. I am planning to put together a proposal inlcuding the following elements: the basic concept description, copy of planned menu, renderings of interior done by my architect specific to site, a general description of how my business will add value to the site and what our competetive edge will be.
    I''m wondering if I will be required to present information on financial projections. I have of course completed these, but I''m not sure if it is customary to present this to the landlord? Anything else that I should provide that I have not mentioned?
    Thanks in advance for all of your help!

  2. #2
    Senior Member
    Join Date
    Jan 2007
    Location
    Salt Lake City
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    1,045
    First, and most important: They are not choosing you, you are choosing them. Let them know that others are interested as well, but you are exploring all options to find the best fit.

    Have all your info, including financials, formatted well in a nice binder. They are there for the landlord to see you've done your homework. It is for them to see while you are there, but not for them to keep. After you get them to say a little about what they can offer you, I would then hit on how you can add value to his location, why you are unique, and your business experience.

    Oh... very important point. Make sure YOU end the meeting -- you have another appointment scheduled at XX O'Clock. It serves as a good psychological negotiating. If you scheduled 1/2 hour, make it twenty minutes, that sort of thing. If they see you have all kinds of time on your hand, then they know THEY are your only option and will use that to their advantage. And if you don't yet have multiple locations... please find some... even if it is only for negotiating purposes (landlord A vs. landlord B).

    Good Luck!
    John Piquet
    caffe d'bolla
    Salt Lake City, UT
    caffedbolla.com

  3. #3
    Junior Member
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    Apr 2007
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    That's great advice! Thanks John!

  4. #4
    Junior Member
    Join Date
    Feb 2006
    Location
    Philadelphia, PA
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    25
    I don't see what the point is of playing games like pretending you have another appointment. If you're looking at other options tell em that you're looking at other options.

    If you are unsure what the landlord would like to see I would simply ask him or her. They will be more interested in your proposed use than your financials. Besides, wouldn't you want to low-ball your projected sales so you can argue for cheaper rent? Even if you don't the landlord may suspect that you are doing so in which case you will have backed yourself into a corner. Either way the landlord has a price per square foot they will be looking to get--it is up to them to convince you that you should pay what they are asking. (as a rule of thumb you'd like to pay rent that equals 3-4 days of sales, assuming you're open every day)

    You will be taken seriously and create a good impression by asking good questions and simply knowing what you are talking about.

    Something else to consider as you look at locations and talk with landlords: Although this will be a business relationship based on numbers, it is also important to consider whether the landlord seems like someone you would like to partner with. It's important to get all agreements down on paper with a good lease but you also want to be able to trust that your landlord will do you right. A good relationship with your landlord will be mutually benificial.

    -Dan

  5. #5
    Senior Member
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    Salt Lake City
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    Unfortunately, negotioation is both a "game" and an art.

    Point is, whoever ends the meeting controls the meeting. If you have to create a reason to end it--fine. But if you let the meeting run its entirety, or you let the other party (landlord or agent) end the meeting, then you have placed yourself in the weaker position from day one. This would not be a smart move.

    Proper negotiating involves a lot of psychology. These agents are pros and will feed you one line of bs after another in order to control the meeting, control the direction of the negotiation, etc.

    They need to be excited about leasing the space to YOU, not just leasing the space. If you don't learn to read the difference quickly, it will sooner or later, impact your entire business. So, yes, there may be need for gameplaying... or a need to be more agressive in your search from time to time. Negotiate to win at all levels, even if winning means walking away.
    John Piquet
    caffe d'bolla
    Salt Lake City, UT
    caffedbolla.com

  6. #6
    Junior Member
    Join Date
    May 2007
    Location
    Texas
    Posts
    7

    Attorney and free rent

    By all means, have an attorney look at the lease! Almost every lease is pro-landlord. It may cost you as much as $1,000, but you may save much more....learned from experience. Also, it is not unusual to ask and recieve 2 -3 months free rent on the front side, particularly if the space has been vacant for a while.

  7. #7
    Senior Member
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    Excellent points mtapp!

    Also note that "fixturing period/buildout" is not free rent. The build out period is rent free, usually 60-90 days and any free rent would not begin until after that period (your occupancy period). And YOUR fixturing period should not begin until after any landlord work has been done, and space has been delivered to you as (at least) vanilla shell--plus whatever extra you have negotiated (flooring, electrical, plumbing, bathrooms, etc.)
    John Piquet
    caffe d'bolla
    Salt Lake City, UT
    caffedbolla.com

  8. #8
    Junior Member
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    Mar 2007
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    I definetely agree with you John. It would be great if negotiating was a simple, straight forward manner, but it really comes down to who is better at it.

  9. #9
    Junior Member
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    Feb 2006
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    Philadelphia, PA
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    25
    I agree that negotiating is an art. This is why I would be a little reluctant to present your financials to your potential landlord. You need to be honest and straightforward yet there is no reason to disclose everything.

    I guess I'm suggesting that you operate from a mindset in which you are the one in charge; you are the employer interviewing a potential employee (ie a potential landlord) and not the reverse. To me, pretending that you have another meeting actually indicates a mindset of uncertainty.

    In the end the negotiation boils down to how much money are you going to pay and what are you going to get. The art of the negotiation is slicing it in such a way that the deal works well for you.

  10. #10
    Junior Member
    Join Date
    Mar 2007
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    11
    Good points all around. Here is one of the first and foremost tactics that I definetely would keep in mind: Do EVERYTHING in your power to get them to throw out the first figure. Then, be ready to talk. Go in knowing what you want, but get them to speak first. They will probably throw out a number that is 20-40% higher than what they are willing to take, but you have to be the judge of that. If you can get them talking about anything but business and keep a conversation going until they are your best friend, they might just admit something to you they were holding out on.

 

 
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