In this episode of Financial Planning for Canadian Business Owners, Jason Pereira, award-winning financial planner, university lecturer, and writer, interviews Rick Di Donato, the Director of Development for Red Berry Restaurants, a massive multi-brand restaurant franchisee located in Canada!
Episode Highlights:
- 1:02 – Rick Di Donato introduces himself and Red Berry Restaurants.
- 2:36 – What are the things business owners need to look out for when negotiating their first lease?
- 4:32 – How is commercial leasing different than leasing an apartment or home?
- 6:49 – Rick discusses the most ridiculous clauses that he has seen on contracts from landlords.
- 11:00 – How should leasehold improvements play into the rent negotiations?
- 13:43 – Jason and Rick discuss how COVID has shown business owners the true colors of their landlords.
- 15:12 – Rick dives into business owners that pay for a ‘turnkey’ property.
- 16:42 – There are a few important concepts to focus on when negotiating a commercial lease.
- 18:49 – Rick talks about the worst situation he has seen with a Continuous Operating Covenant.
- 20:11 – What are the best practices when a renter needs utility upgrades?
- 21:48 – Rick dives into the unique clauses that need to be included when signing a lease in a plaza.
- 26:32 – What should business owners be aware of when purchasing a property?
3 Key Points
- It’s vital for business owners to have a lawyer present whenever reviewing a commercial leasing contract in order to avoid getting undercut by hidden clauses.
- For renters who are putting in all the capital for leasehold improvements, negotiations should be made to soften up the rent.
- Business owners should always avoid a Continuous Operating Covenant because if they are gone for any unforeseen reason, the landlord can reclaim the premises.
Tweetable Quotes:
- “I think one of the things that may lull people into a false sense of security is the misunderstanding around leases in general.” – Jason Pereira
- “A lease is essentially a marriage contract...It sets the rules out for how you’re going to live your life together as landlord and tenant.” – Riccardo Di Donato
- “If you can make a verbal agreement with someone, they should have no issue putting it in writing.” – Riccardo Di Donato
- “When you’ve outfitted a location for a certain type of business, it becomes immediately more appealing to anyone looking to get into that kind of business.” – Jason Pereira
- “It’s about doing the homework upfront knowing what you need and making sure that it’s inserted into the lease so that your landlord agrees to it.” – Riccardo Di Donato
Resources Mentioned:
Full Transcript
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