5.X — Options, Assignment, and Your Exit #
Options give you the years to operate and the leverage to sell. Nail down the first year’s rent of each option period at signing — do not leave it to “market rate” later. That hands the landlord a blank check. Tie option rent to CPI rollover from the preceding year, not market rent. Predictable. Plannable. And make all options assignable — that is critical if you ever want to sell the business.
Assignment rights are how you sell your business. If your lease does not allow assignment, you do not really own a sellable asset. Negotiate the right to assign the lease without unreasonable landlord restrictions. Negotiate sublease rights and the right to keep the spread — the difference between what you pay the landlord and what your sublessee pays you.
If the landlord puts the building on the market, negotiate a right of first refusal — 15 to 30 days to match or exceed any offer.
Have an exit strategy before you enter. What happens to your lease if the concept fails? What if road construction kills your access for six months? Negotiate provisions that protect you when circumstances move beyond your control. Knowing how you get out is more important than knowing how you get in.
