Starting a business can be a hard task to accomplish. There is a variety of legal obstacles that can hamstring your business plan. However, with an experienced property lawyer in your counsel negotiating commercial contracts in relation to leasing can be made easier.
When thinking about where you should a locate your business, it might pay to lease a retail shop.
Why choose a retail shop lease?
According to figures released by the Shopping Centre Council of Australia (SCCA) for 2015, there are currently over 1,700 shopping centres that exceed 1,000 square metres of gross lettable area in Australia, which house more than 65,000 speciality shops.
Retail shop leasing agreements come with their own nuances.
The SCCA points out that one of the major benefits of leasing retail space within a shopping centre is that you have access to a much larger or more focused flow of customer foot traffic than in other retail locations.
However, a business that rents a retail shop is faced with a series of circumstances that are not felt by retail tenants in other locations.
According to the Retail Shop Leases Act 1994, retail shop premises are defined by either:
- Their location in a retail shopping centre; or
- Their entire or predominate use for the carrying on of one or more retail businesses.
The Act governs retail shop leases and the dispute resolution process by defining mandatory minimum standards.
Before you sign
If a tenant leases less than five retail businesses in Australia, he or she will need to attain a financial advice report and a legal advice report before they can enter into a retail shop agreement.
To acquire the legal advice report, you will need to consult with a property lawyer who has experience in commercial agreements.
The Act also requires both landlord and tenant to make available crucial information through disclosure agreements.
Knowing your lease
As a lease is a legally binding contract, it should not be entered into lightly. Early termination, for instance, can lead to financial and legal consequences that can damage your interests.
According to the Queensland government, the lease should set out a range of aspects, such as:
- The rent calculation formula
- The rent review process
- Outgoing payments
Agreeing to a lease within a shopping centre could be one of the biggest decisions you make for your business. To ensure your interests are safeguarded, make sure you talk to an experienced property lawyer.