Parking Pitfalls for Franchise Tenants

from Dale Willerton and Jeff Grandfiel, Commercial Lease Consultants, The Lease Coach.

Do you have enough parking spaces for your customers, you and your staff? It’s a common problem The Lease Coach sees with both new and established franchise operations.

We’ve discussed the problems with parking in our new book Negotiating Commercial Leases & Renewals For Dummies in greater detail but here are a number of factors to consider.

First and foremost, what is the availability of parking spaces for your customers? Does it appear that there are there enough stalls for all to use? Where are these parking spaces – in front of, behind or at the side of the building? Are the spaces “rush parking” (first-come, first-served) or assigned specifically for your use? These “signage-designated” parking spots are desirable and discourage others from taking your space(s). If your business is located near a major grocery store, consider that the best available parking spots may be taken by food shoppers. Parking spaces located close to your door will be advantageous for elderly customers who do not like to or cannot walk too far.

For many franchise tenants, parking is free. But for some, monthly parking charges for staff vehicles can range from $85/month to several hundreds of dollars per month. Even if you are prepared to pay for parking, don’t assume it will be available. Consider the cost of customer parking as well. With lengthy visits / shopping trips, this cost can increase dramatically and your customers may not be able to simply run outside and put more money in a parking meter. As an option, your customers may greatly prefer “pay on the way out” parking as the lesser of two evils. This can allow your customers to bring their parking ticket into your business for validation and reimbursement.

In our experience of working for franchise tenants, here are a number of real-life horror stories for you to remember. We recall visiting a couple of business-owners who had hired us to do a new lease in a property they had found and liked. When we arrived at the property, it was around 10:00 a.m. and the parking lot was already packed with other cars. We pointed this out and questioned just how busy would this same lot be after the vacant units were occupied with more tenants. With hearing this advice, these two entrepreneurs wisely decided it would not be in their best interests to pursue this leasing opportunity. We also well remember a couple of other entrepreneurs who had been located in the same property for almost 18 years and hired us to negotiate their lease renewal. These tenants were very frustrated that their landlord had converted the property’s free parking into paid only parking – this, of course, would greater inconvenience this business’ customers. Our message here is to never assume that your parking situation will always remain the same.

As some final couple words of advice, always assume that the only parking rights you will have are the rights you get in writing in your lease agreement. Also, remember that it’s best if the customers of the franchise tenants can park in the best stalls while franchisees and their staff can park elsewhere. Determine whether the landlord has a designated area for staff to park and whether there’s a parking policy that the property manager polices or regulates. Smart landlords require both tenants and staff to provide their vehicle license plate numbers to the property manager for this very purpose. If the landlord or real estate agent tells you that all parking is first come, first serve, you may want to include a clause in the lease agreement stating that if (in the future) the landlord gives special parking rights or privileges to other tenants that they will have to give those same privileges to you. Parking is often used as an incentive by a landlord trying to attract new tenants, and landlords have been known to unfairly divvy up the parking to suit themselves or to attract other tenants.

For a complimentary copy of our CD, Leasing Do’s & Don’ts for Franchise Tenants, please e mail DaleWillerton@TheLeaseCoach.com.


The Lease Coach - For Dummies bookDale Willerton and Jeff Grandfiel from The Lease Coach are Commercial Lease Consultants who work exclusively for tenants. Dale and Jeff are professional speakers and co-authors of Negotiating Commercial Leases & Renewals For Dummies (Wiley, 2013). Got a leasing question? Need help with your new lease or renewal? Call 1-800-738-9202, e-mail DaleWillerton@TheLeaseCoach.com or visit www.TheLeaseCoach.com.

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