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Exclusivity in your development – what to know

On Behalf of | May 12, 2016 | Commercial Real Estate |

The perfect location is hard to find. You might have spent months looking for the right development to open your new business. Whether you are opening a restaurant, retail store or other type of establishment, you know that in order to be successful, you are going to have to build a steady client base. You do not want any obstacles in your way that can prevent you from being able to achieve success.

When you discuss a lease with your landlord-to-be, you want to pay particular attention to the exclusively clauses contained therein. The reason for this is simple: this is the only way to ensure that you have the only business like yours in a particular development or area. Failing to take this step can have very negative consequences, which we have seen time and time again. 

Example of how a landlord can exploit these clauses

One of our past clients owned a Chinese food restaurant in a shopping center. The business owner signed a lease that contained an exclusivity clause. However, the clause was rather vague, so it was not extremely helpful when a conflict arose later.

The landlord decided to lease out space to a dim-sum restaurant. Having two restaurants offering somewhat similar types of food had an extremely negative effect on the Chinese restaurant’s business. The business owner contended that the landlord breached the exclusivity clause, but the landlord contended that the clause was written in such a way that only other Chinese restaurants were prohibited. Since this could arguably be called Vietnamese food, the landlord believed that he had the power to rent the space out to those other tenants.

Find out how to protect your business

Before you sign any lease with a landlord or developer, speak to an attorney about the provisions contained in the document. You need to be sure that the agreement you make does not diminish or reduce your rights. If you do not have a clear provision regarding the exclusivity of your business, your landlord could open a competing establishment right next door to you and put you out of business.

A review of your lease by an attorney can save you a lot of problems in the long run. You may not have any idea about how the language of these clauses should read, and your landlord may be taking advantage of you. Do not make a decision that places your business at risk before you even have a chance to get started.