Commercial tenants have the right to occupy the landlord's property as their premises once the lease is finalised. In exchange for occupying the premises, the tenant makes rent payments to the landlord. When you negotiate the lease agreement, you will want to ensure that the existing lease provisions will satisfy your needs for your business. You will want to check that the key terms in your retail lease protect your trade at your new commercial premises. Not all landlords will agree to terms specifically to protect your business, but if you have adequate bargaining strength, you may be able to negotiate these. This article will explain some key terms you, as a commercial retail tenant, may wish to include in your UK commercial lease to protect your trade.
Shop Front
As a tenant, your retail shop front must always be on display to help market your business and encourage customers to enter your premises. You will also want to prevent your shop signage from being blocked or obstructed by external objects. If your retail lease is for a shop on the high street, this will be reasonably easy to ensure. However, this may be more difficult if your lease is for a shopping centre unit. Nonetheless, if possible, it should be part of your lease terms, as it will help protect your trade. Commercial retail tenants should, if possible, negotiate this with their landlord.
You should also include a restriction clause in your commercial retail lease. This clause would restrict your commercial landlord from changing the direction people in a shopping centre travel. For example, if lifts open near your shop or escalators travel in your direction, changing these could affect your trade significantly. However, as this lease term directs the shared area of the commercial property, you may struggle to get your landlord to agree to it.
Trade Exclusion Zone
Retail tenants who plan to occupy a retail premises in a shopping centre are well advised to include an exclusion zone provision in the commercial lease. This clause recognises that five metres of the common area from your shop is your domain in the commercial lease agreement. Subsequently, others are prevented from placing or giving permission to others to place anything in this area. Exclusion zone clauses prevent any objects from distracting or blocking your business premises. These clauses also help to prevent direct competition with your business. For example, carts or kiosks selling products similar to your business cannot be located within five metres of your shop.
Whilst an exclusion zone may be a crucial way to protect the trade from your business, your commercial landlord may resist this lease provision. Landlords may object to this provision as it restricts their potential revenue stream.
Additionally, you will want to ensure your landlord cannot interfere with your trade. You will want to include this provision to protect your trade. However, some retail lease agreements may allow a commercial landlord to enter the commercial premise for specific reasons. This can include installing conduit or other machinery or apparatus. Your commercial landlord may not agree to the exclusion of this type of leave provision. At a minimum, you should ensure that when your landlord exercises this lease provision, it does not reduce your trading area.
Intangible Assets Protection
Protecting your trade in a commercial retail lease goes beyond ensuring that the lease provisions do not restrict your trade. Commercial retail tenants also need to be sure their intangible IP assets are protected. For example, if your retail premises is in a shopping centre, your lease agreement should ensure the protection of your:
- business name;
- logo; and
- branding.
You can protect your business' intangible assets via a restriction clause in the commercial lease agreement with your landlord. This restriction clause would prohibit your landlord from using these assets in the shopping centre's general marketing material. Also, this clause can protect your business's intangible assets from being used in a manner you have not given consent for in advance.
Financial Information
Protecting your financial information as a means of protecting your business trade is a paramount concern for business owners. Whilst this may seem common sense, it is worth including a lease provision concerning this in a commercial retail lease. In certain commercial leases, particularly in shopping centre leases, landlords may require your trading figures. Commercial retail tenants will want to ensure these trading figures are not shared anywhere else.
Key Takeaways
If you are part of a retail lease, it is important to protect your trade. If you are a commercial retail tenant, this may mean ensuring specific provisions are included in your commercial lease agreement with your landlord. We have discussed some of these in this article. For example, lease provisions that protect the exclusion zone around your business premises. Also, lease provisions ensure your shopfront can be seen and that customers are directed toward it.
