Leasing Space

Leasing Space:

The lease may become the most important factor in your success:

Length:

7 years (or 3 years plus a 3 year option) is the minimum.

Rent:

Laundromats make money, but they make it a dollar at a time. So make sure the rent justifies your exposure and location. Increases: Reasonable rent increases are acceptable and expected, but they must be limited and spelled out in the contract of lease. The best increase indexes are tied to CPI increases rather than food or wage increases. Be sure to calculate in dollars what the monthly rent will be near the end of the lease - you may be in for a surprise.

Market Review:

These should be avoided if possible, as they are open ended.

Assignability:

The lease must be fully assignable to permit the extension of credit and for future sale of the business.

Useable space:

Calculate the rent based upon the useable interior space to get a true cost per square meter. Be sure to measure it yourself. Unusable space won't make money. Improvements: Try to negotiate improvements to be made by the landlord, even ask if it increases the rent. Ceilings, lighting fixtures, storefronts, wall decor, floors, alarms and utilities all require a cash outlay.

Utilities:

A laundromat can't operate without adequate water, gas and electricity. You'll suitable electric service. Gas and water supply needs to be 35mm or bigger for most stores. Is the water service already metered for the store - it will need to be before you open for business.

Outgoings:

These "extras" can really add to the rent. Check for "common area" charges, management fees, charges for parking spaces, rubbish removal, landscaping, taxes or tax increases and other charges. Add them in.

Releases:

You don't want to pay rent if the building is unusable due to fire, floods or major repairs. How long does the landlord have to make major repairs? Good advise - use an attorney.

Start date:

Time is money. It will take time to build a store. It may take time for the major anchor store to open and create the traffic for a shopping centre. Many times the first several months can be rent free, or better yet, the lease effective start date will be postponed.

Support:

Andrew Barton will walk next to you the whole journey.