Magazine for the professional nail industry.
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analysis; that is, make your projections at varying levels (optimistic, most probable, and pessimistic) for different locations with differing lease rates. Determine your break-even point for each potential location. The optimistic is hoped for, most probable should support the rental rate, and pessimistic is the worst-case scenario. TYPES OF LEASES For nail salons No Lift Nails Cuticle Oil brings together three of nature's richest ingredients: Avocado,Oil, Almond Oil and Vitamin E. The result is a superb natural oil that conditions nails and softens skin with a single drop. Our unique formula won't promote lifting. After all, it's from No Lift Nails, the industry leader for three decades. Available in 1/8 oz, 1 oz and 4 oz size, No Lift is a naturally rich cuticle oil for your customers and a rich source of profits for you. there are usually three types of leases: the gross lease, the net lease, and the parol lease. With the gross lease the only additional occupancy cost is utilities. With the net lease (a.k.a triple net) all property operating costs such as building insurance, taxes, repairs, utilities, etc., are added to the rent. In a multi-tenancy property, it is your share based on your occupancy percent of the whole. Another trap for the unwary is that gross leases often contain escalator clauses, whereby as the cost of taxes, insurance, etc., increase, your rent also increases proportionately. The parol lease is usually a gross lease with a month-to-month tenancy. That is, you could be out at the end of the next month. Percentage leases are rare in salons but a landlord may suggest it. With this kind of lease, after a stated annual revenue is obtained, the landlord receives a percent of all additional income. OTHER CLAUSES Be certain the right to transfer or assign the lease is contained in the agreement. Ensure the clause reads that if the lease is assigned any prepaid rent is credited to you, not retained by the landlord. This is a common trap. Many leases contain a clause by which prepaid rent is theirs to keep. Most leases contain a clause by which all interior improvements become a part of the building. Although installed at your expense, as title passes to the lessor you can Lloyd Manning is a freelance writer specializing in never remove the upgrades, business matters. His most recent book, Winning and if selling your salon, With Commercial Real Estate, is available from cannot expect a purchaser to Booklocker Inc., Barnes & Noble, and Amazon. buy these improvements. Although you may have paid www.nailsmag.com/fifi/21249 122 | NAILS MAGAZINE | for them, they are not yours to sell. Haggle over this one. As a general rule, if you can't amortize the cost of the improvements during the first lease term, either their cost or the rent is too high. Start-up rental holidays, fixture, and move-in allowances are common. Most property owners expect to contribute two or three months' rent to induce a tenant to occupy a vacant area. So much depends on how badly the owner wants you in and how long it has been vacant. A step up clause that provides for a low initial rent, then periodic increases, may seem benevolent. Most only let the tenant in gently, then soak her later. The length of lease should be negotiated based on your comfort level. If your salon is a sure winner at a low rental, go for a longer term. If you're uncertain, go for the shorter term. Either way, as it costs nothing extra and may protect your investment, always include one or two renewal options. Before signing, inspect and negotiate each clause separately, considering its effect on your salon's operation and profitability. You must live with the terms of the lease for a long time. If they do not work for your benefit, your troubles may have just begun. Never assume that when first presented all terms and conditions are engraved in stone. So much depends on how badly the owner wants you in and the negotiating skill of the parties. Whether to have your lawyer negotiate the lease is a personal decision. Proper negotiation requires a full comprehension of your business, and no one, your lawyer included, understands it as well as you do. Still, for all legal and contractual matters employ an attorney. Be sure the one you hire has a good understanding of commercial leases. OCTOBER 2013