What Is a Restaurant Lease Agreement PDF?
A restaurant lease agreement PDF is a basic commercial lease form you fill in with specific details about leasing a property for use as a dining facility.3 min read
2. Commercial Lease Agreements
3. Restaurant Lease Agreements
4. Net Charges and Common Area Maintenance
5. The Condition of Premises Section of the Lease Agreement
6. Exclusive Use Clauses in Restaurant Lease Agreements
7. Assignment Rights in Leases
Updated November 18, 2020:
A restaurant lease agreement PDF is a basic commercial lease form you fill in with specific details about leasing a property for use as a dining facility. The agreement is a rental contract between the landlord and the tenant. This type of form is used when you've found the desired location to open a restaurant, or if you're a property owner who wants to rent out a property for use as a restaurant.
Common Restaurant Lease Terms
The terms for leasing a restaurant can vary from the terms for leasing other types of property. The lease protects the interests of both the tenant and the landlord. Like a regular property lease, the tenant pays for the right to use the property. Leases for commercial purposes are often longer than residential leases and can vary in length from three to five years. Tenants in commercial properties also often have renewal options that let them stay in the property at a predetermined rate.
Commercial Lease Agreements
Many businesses don't own the property where they set up shop. They enter into commercial lease agreements and rent the property. Businesses save money by renting properties instead of buying them. Companies and landlords can negotiate terms and conditions using a commercial lease agreement. The terms included can even establish an exit strategy for the business to vacate the property if the need arises to close the shop or relocate. This makes renting a property a sensible option for many businesses.
Restaurant Lease Agreements
It's appropriate to use a restaurant lease agreement if the property being rented will be used as a restaurant. The tenant's success is a benefit to both the tenant and liability protection for the landlord. To set up a restaurant lease, both parties must agree to the terms. Some key terms to negotiate include:
- Which party carries insurance on the property
- The due date for rent payments
- Space for customers when it's busy
- Tenant and customer safety
- Property renovations
Net Charges and Common Area Maintenance
Net Charges, or NNN/CAM, refer to the part of the lease agreement that asks a tenant to cover either the full cost or a portion of the cost for expenses related to the property under the category of additional rent. These charges include things like maintaining the property, repairing walkways and parking areas, building security, and common area utilities if the rental space is in a mall or shared building. Property tax and insurance for the portion of the property used by the tenant also go under these charges. NNN/CAM charges are paid monthly along with the regular rent payment based on estimates for the entire year.
The Condition of Premises Section of the Lease Agreement
The condition of premises section of the agreement details what comes with the rental property and the condition the premises will be in when the tenant takes delivery. This section is important to have in writing because the tenant and landlord might have different ideas of what is or should be included with the property. The space may be an area that was previously used by another business, or it may be a newly developed site that is still being built or one that has never had a tenant before.
Exclusive Use Clauses in Restaurant Lease Agreements
If you're setting up shop in a mall, you may get the benefit of increased foot traffic in your restaurant, but you may also want to make sure your landlord won't rent to a competing restaurant right next door. Adding an exclusive use clause to the lease agreement protects your business because the landlord then can't cause your business to suffer by setting up a competing venue in the same facility.
Assignment Rights in Leases
When assignment rights are permitted by the lease, the tenant can transfer the remaining time in the lease to a third party for the rest of the lease's term. Assignment rights are a way a tenant can get out of the expense of the lease without breaking it if the business doesn't work out or if a decision is made to sell the restaurant. It's common for the landlord to have the right to approve or deny the assignment.
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