Kitchen Lease Agreement/contract - Help!!

Business By kdehtan Updated 28 Jun 2008 , 11:38pm by Monkess

kdehtan Posted 25 Jun 2008 , 5:39pm
post #1 of 8

HELP!! I am goint to start leasing kitchen space starting in July and the owners (business friends of my husband's) told us to come up with some type of an agreement/contract. They own a sandwich shop (that is only open for lunch Monday - Friday) and have never rented their kitchen space out. I have made cakes and cookies for them and they want to help me get started. They want some type of an agreemen/contract to protect myself and them (which is understandable). They own other businesses and are EXTREMELY busy, so that is why they wante us to come up with it.

Does ANYONE have a generic agreement/contract that I can go off of?

How much do you pay to lease? We discussed 10 - 15% of sales. Is this reasonable?

Thanks,
Karee

7 replies
southerncake Posted 25 Jun 2008 , 6:13pm
post #2 of 8

I think 10 to 15% of sales is reasonable, especially if you are slow right now in the beginning. The busier you are, you may want to consider a flat rate.

I've never rented a kitchen from someone else, but in my lease agreement, one of the main points for mine is that the landlord is not responsible for any of my products and holds no liability.

Hopefully someone who has rented a kitchen space will have more info!

LeanneW Posted 25 Jun 2008 , 8:38pm
post #3 of 8

you might want to add them to your insurance policy too and have them do the same for your business.

Even though your agreement says you aren't liable for eachother's business dealings a customer who is taking legal action may decide to pull the kitchen owners into it.

I think a % of sales is very generous of them, I pay by the hour in my kitchen.

the agreement should cover access to the space, times and dates that you can or cannot access the space, if your time there is exclusive or can they or another renter be in the space at the same time.

How and when will you pay them.

what is the process for terminating the agreement, how much notice will they have to give you if they want you to leave and vice versa.

can you have guests in the space while you are there?

is there a storage space that is dedicated to you?

thats all I can think of right now.

indydebi Posted 26 Jun 2008 , 2:27am
post #4 of 8

Doing it on a percentage IS very generous because as a kitchen owner, who is interested in renting out her downtime to a caker, I would NEVER rent it based on a percentage of your sales.

Here's why: I don't know if you're a good or bad business person and I don't really care. I don't know if you have a good pricing structure in place or if you even know how to make one and I don't really care. I'm looking out for my interests here.

Let's say I rent you space for 10% of sales; let's say you sell a 10" round cake for $50. You're going to be in my kitchen for at least 4 hours ... mixing, baking, cooling, making icing, decorating, cleaning up. You're using my electricity, my $50,000 worth of equipment, my mixer, my oven, my commercial dishwasher, my soaps (because my sinks and dishwasher are hooked up with Eco-Lab automatic soap dispensing for cost savings to me) .... and the bottom line is that you're going to hand me a five dollar bill for all of this? icon_confused.gif I don't think so, Tim.

If you don't know how to write a contract and they have no interest in writing a contract, then I'd DEFINITELY hire an attorney to write a contract. This is not an area where the blind should be leading the blind.

kdehtan Posted 26 Jun 2008 , 7:57pm
post #5 of 8

Tim,

They (the kitchen owners) are not really interested in making money off of me. They actually didn't want ANY money from me, but to just help me get started on my business. My husband is the one who offered them a % and they said," whatever, we just want to help get you going." These are REALLY good-hearted people who live their lives trying to help others (and they have been taken advantage of in the past). They are also VERY wealthy people who own 3 businesses and are not really interested in making "big Money" off of me.

They do however believe in my work. They have started using me for ALL of their cake/cookie needs and are recomending me to others. The wife's family is also pretty well known in this area, so I don't think they are worried that I will not have many orders. They are also willing to sell and display my items during the hours of their sandwich shop.

So as far as the agreement/contract goes, they just want some VERY simple form drawn up to protect each of us (because they have been burned in the past by others - $40,000 + stolen from them by one of their shop managers). They don't want to fool with any lawyers.

I was just simply wanting to know if anyone on this sight had a copy of an agreement/contract that I could go off of to make my own.

Thanks for the input though!

ladyonzlake Posted 28 Jun 2008 , 12:49am
post #6 of 8

Indydebi is right. Most kitchens charge by the hour, week or month. You are very fortunate to have people like this who beleive in you! Good luck to you. Sorry I don't have a copy of a contract for you.

ladyonzlake Posted 28 Jun 2008 , 12:50am
post #7 of 8

Indydebi is right. Most kitchens charge by the hour, week or month. You are very fortunate to have people like this who beleive in you! Good luck to you. Sorry I don't have a copy of a contract for you.

Monkess Posted 28 Jun 2008 , 11:38pm
post #8 of 8

Well it sounds that they ARE nice people. To be fair to them and yourself, it is important to have something in writing. Liability is most important, a good idea someone gave earlier would be to include them in your business insurance. Also you might want to pen down the timings you will use the kitchen facilities, just so that there are no hard feelings as you go along...wherein they might not be able to have you around whilst serving a packed house. Take care and good luck!

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