Our attorneys are advising small business and franchise clients on the hour about the ramifications of the Coronavirus (COVID-19) global pandemic which has forced most small businesses around the country out of business for an unknown period of time. Our clients conduct business in some of the hardest hit industries such as fitness, gyms, spas, restaurants, fast casual and quick serve food establishments, fast food, med-spas, beauty and health, educational, pet services, wellness, retail boutiques, schools, and sports leagues. These are all considered “non-essential” businesses.

Many of our clients have employees that are looking for answers on their near future. We are monitoring the federal government small business relief programs and loan options offered to small businesses and assisting clients with applications. However, the one major expense for small businesses that might assist you in figuring out your next steps and plan ahead is RENT.

With regard to negotiating rent with your landlords, we are advising our small business, franchisor and franchisee clients as follows:

• Be Proactive. Our franchisor clients have come to us requesting memos to send out to their franchisees about rent abatement and rent deferral options and how to approach landlords with requests. For franchisees and small business tenants, reach out to your landlord now and find out what the landlord is doing for businesses closed due to government shut downs. This situation might invoke the force majeure clause included in most leases but that may not extinguish your responsibility to pay rent. We recommend you act quick and get the ball rolling with your landlord before the other tenants’ requests start to come in.
• Be Prepared. Your landlord may request financial information about your business and how the Coronavirus is impacting sales. Have this information printed/scanned and ready to send to your landlord to expedite their decision-making process.
• Be Informed. There are a few options that you might consider discussing with your landlord based on their appetite to assist you during this global crisis. The first request should be for rent abatement which means that the rent would be forgiven by the landlord. If the landlord is not willing to start there, we are recommending to our clients that tenants request a rent deferral which means that rent will not be paid for the near future (60-90 days) but that these rent payments would be tacked on to the end of the lease effectively extending the term by a few months.
• Be Flexible. This is not a time for landlords and tenants to engage in gamesmanship. Landlords and tenants should be openly communicating with each other to achieve a positive, win-win result that keeps the tenant in business through this difficult time and eventually covers the landlords’ expenses.

We are seeing that landlords are available and willing to start these discussions with our franchisee and small business clients and tenants in general.  For our clients that have not yet opened, landlords have extended rent commencement dates until the businesses get the all-clear to open. The coming months provide an opportunity for landlords and tenants to strengthen their relationship by being agreeable to creative solutions to help tenants weather this storm. Landlords and tenants must work together to achieve their common interest of avoid a viable business become an empty space.

If you have any questions on dealing with landlords or tenants in this unprecedented time, please contact us at (561) 693-3234 and one of our attorneys will be available to speak with you. We have prepared addendums to leases and letters to landlords on behalf of our clients, and we would gladly step into any negotiation to assist with your efforts to abate or defer rent.

About Wasch Raines LLP

Wasch Raines LLP is a franchise and business law firm providing a comprehensive range of services to emerging and established businesses and franchise companies in a variety of industries. Through its unique business model, the firm offers its clients the benefits of having a cost-efficient in-house general counsel and a full service litigation team.

Wasch Raines LLP has has provided this article for general informational purposes only. It is not intended as professional counsel and should not be used as such. You should contact your attorney to obtain advice with respect to any particular issue or problem.