What Should Be In A Rental Agreement?

Business By ccr03 Updated 7 Jul 2009 , 9:39pm by indydebi

ccr03 Posted 6 Jul 2009 , 4:17pm
post #1 of 4

I am in the process of getting legal and will be renting the kitchen from my sister. Essentially, her new location will be a party supply/equipment rental storefront w/me renting the commerical kitchen. I'll still be custom orders but I'll also have a display case w/a limited number of cakes/cupcakes for sale for the weekends and such. And I'll be able to do my consults and orders there too.

Since is this a new business venture (the storefront - she's been in a business a long time) we need to come up with a rental agreement. We spoke with our local economic development council and he gave us some real good ideas as to how to approach the agreement. We both know and agree that we need to write up a contract so that later on down the line there won't be any problems.

Personally, I'm still not sure where to begin on the contract. I want something that is fair and beneficial to both of us. For those that rent kitchens, what does your rental contract look like? Would you mind sharing?

(Sorry if I rambled icon_biggrin.gif

3 replies
Doug Posted 6 Jul 2009 , 5:15pm
post #2 of 4

for this business venture -- she is no longer your sister -- but your landlord - the same as any other person who might rent to you.

do not confuse the two --- approach as a purely business transaction.

you are subletting the space.

surly your LAWYER has a basic sublet lease agreement to use as a starting point.

the basics:
>amount of rent (and good idea to also include the max amount rent can increase for next several years -- or even lock in a specific amount for a set term such as 3% annually for 6 years)

>due date

>method of payment

>late fees

>exactly what the rent pays for: physical space, equipment, utilities, storage, who pays for what repairs (what if A/C blows out?), etc. Be as specific as possible -- right down to has to pay for the grease trap being cleaned and any health inspections.

>amount and type of insurance you must carry (liability? fire? theft? property?, etc.)

>who is responsible for what in terms of display of your merchandise, sale of your merchandise, orders for your merchandise (right down to who can answer the phone and write up the order!)?

>dispute resolution procedures

>hours of public operation

>hours of accessibility (when you can work that it's not open to public)

>what customization you can/can not make to the physical space

>procedure for canceling the contract

>how your business will be advertised: inside the store, outside the store, as part of ads in paper/phone book in relation to her existing advertising (will your name be on the store sign for example? will you be able to put up photos, menu lists, prices, etc.?

>what happens to you if HER business fails

>what happens to her if YOUR business fails

>who has what responsibility in terms of additional employees? who interviews? who hires? who fires? who pays? who controls/disciplines/gives directions?????


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this is not a family "get-together" -- it's business

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ok indydebi, and others, what did I forget?

ccr03 Posted 6 Jul 2009 , 5:56pm
post #3 of 4

Awesome! Thanks Doug! It looks like we are in the right track. These are all the areas we covered w/the HEDC.

We are VERY much aware that this is not a family get-together and she and my BIL are my LANDLORDS. We've done some minor business transactions together before (I've done their marketing for them), but not at this level yet.

But yes, this is a business transaction, first and foremost.

indydebi Posted 7 Jul 2009 , 9:39pm
post #4 of 4

doug's list is excellent. I also agree with each getting your own lawyer to review and advise.

- What does the rent include .... look at dumpster fees, for example. Can you use their's or do they expect you to get your own, or expect you to "chip in" on their monthly dumpster bill?

- Maintanance agreements? I'm responsible for any A/C repair but I'm also required to have an A/C maintenance program in place to have it inspected regularly.

- If it's their kitchen, I assume it's their equipment? My insurance company requires an inspection of my hood and fire system every 6 months. Who is responsible for this?

- Ok, they tell you that you can put a sign on the outside and/or put up signs inside. Any special type or style of sign that is or isn't permitted?

- Internet, phone and cable TV: Do they already have this and can you tap into it? Is it included in the rent? Do you have to hook up your own? (I don't know about you, but I just can't work without TV noise in the background).

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