Can your Landlord stop you from opening another business?
He sure can. If your lease contains a “radius restriction” or a “non-complete clause”, that Landlord can hold you in default of your current lease if you open up another business too close to your existing one.
These clauses, along with several others, appear to be common terms and often overlooked in retail leases today. With the explosion of strip malls and nation-wide companies filling these centers, the Landlord’s realize that if one business is too close to another, it will divide the traffic from his space and his building will appear less popular. Which in turn, decreases the amount of rent he can demand, because he doesn’t have the proven traffic. Therefore, Landlords have installed these radius and non-compete clauses into their leases to maintain the popularity and rental rates at his center. These clauses are especially important to the Landlord if he is getting a percentage of the sales profits from that Tenant as rent.
It is extremely important for you to review your lease with a professional for explanations of terms and advice on how to negotiate that lease. The Landlord will generally always have the Lease structured to his/her benefit, but hey, they own the building and are afforded that luxury. Remember, in most cases, the Tenant has the ability to negotiate terms of the lease with the Landlord in order to come to a more bilateral agreement.
Posted by:
Neil Dailey
The Baskin Real Estate Specialists
918-258-2600
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