Object lesson--follow the exact terms of the lease when exercising an option to renew!

Rock Bottom Brewery tries to hang onto downtown lease

By Kathleen McLaughlin
Indianapolis Business Journal / IBJ.com
November 3, 2010

Landlord John Goodman wants Rock Bottom Brewery out of its West Washington Street location in downtown Indianapolis by next June.

Goodman recently rejected the restaurant's attempt to renew its lease for five more years. Rock Bottom, part of the Colorado-based chain, has occupied 14,600 square feet at 10 W. Washington St. since June 1, 1996.

The renewal notice was invalid, he said in an Oct. 8 Marion Superior Court filing, because it didn't come from the proper entity, which is named tenant Walnut Brewery Inc., and wasn't delivered by the U.S. Postal Service.

"It is unusual," said John Buerge, director of development and property management for Rock Bottom Restaurants Inc. in Louisville, Colo. "I think this is more he wants the space back for whatever reason."

Buerge insists that Rock Bottom's notice was adequate because it arrived via overnight delivery from UPS and required a signature. Similar cases in other states have been resolved in the tenant's favor, he said. Rock Bottom filed a notice to have the case moved to U.S. District Court of Southern Indiana.

To read the full article... click here.

It's Location Location Location

Today I had a first in my career. I met with a potential Seller whose total gross monthly income would not cover the monthly rent charge of business. A 100% rent factor!!!!! The only logical thing for this seller to do was close the business. It was easy with hindsight to see what this potential Seller had done wrong:

---leased twice as much space as was actually needed.

---failed to analysize how beneficial this location really was for the type of business being opened and operated.

---failed to recognize the true size of the market for the services and product being offered and who the potential customers were and where were they in geographical proximity to the store.

---failed to negotiate the lease in manner that the owner's personal lease liability was limited to the first year or two of the lease or to negotiate a short primary term with a series options to extend the lease if the business is a success. Remember lease liability survives the closure of the business if closure occurs during the term of the lease.

Failing to pay a great deal of attention to lease terms and consequences is often one the major mistakes made by a new business owner.

Don't be the first tenant in a new strip center!!!!!!!!! If there are lots of vacancies in the strip center find out the reason and don't be afraid to look for another location.