This is a sad story that impacted a well-known national food franchise recently. The names are shrouded to protect confidentiality.
Simply put, the franchisee – a multi-unit franchisee, no less – missed a deadline for exercising their renewal option. They initially contacted PacifiCORE several months after the deadline had passed. They wanted to extend the lease and figured the landlord would gladly renew the lease of a tenant that had run a successful operation and had paid their rent on time, faithfully for the past five years.
One would think so, right? But the perfect storm gathered and the situation ended with a much less desirable outcome. Right on the heels of engaging PacifiCORE, the tenant received an estoppel certificate from the landlord. It seems the property was in escrow to sell. Not only did this put the tenant in limbo – neither the current landlord or the prospective buyer was in a position to unilaterally negotiate a lease renewal with my client, but it introduced a new player onto the stage whose intent and merchandising strategy were unknown.
We nevertheless contacted the potential new owner to communicate the desire of our client to renew their lease. The buyer turned out to be a national player, decisive, and aggressive. Escrow was short and closed within two weeks. After closing, the new landlord informed us of their plans to assemble my client’s space and an adjacent store and lease it to a larger, more recognizable national chain. My client was out of luck with no leverage and lost their capital investment in their restaurant. The franchisor was out a very well located, prosperous unit that advertised the brand well in the local market.
Clients who engage PacifiCORE at the outset of site search and lease negotiation process have an expert and advocate to track critical dates throughout the lease term. Who is playing back stop for you to make sure critical dates are not missed?
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