Franchisee Real Estate Lease: SINGLE NET LEASE

A single net lease is a commercial real estate lease where the franchisee (tenant) is responsible for paying base rent plus one of the major property operating expenses, which is almost always the property taxes.

Contact Neufeld Legal PC for franchising legal matters at 403-400-4092 / 905-616-8864 or Chris@NeufeldLegal.com

The complexity of the lease agreement for the commercial real estate that is used in the franchise operation can very easily equal, or even surpass, that of the franchise disclosure document and the franchise agreement, such that retaining the legal services of an experienced lawyer to decipher, explain and negotiate the commercial lease agreement and its schedules. And for over 25 years, we have been working with business owners, including franchisees, to understand and deal with commercial lease agreements that have been presented by landlords and are foundational to their business operations. To gain the most from our legal analysis and advice as to the commercial leasing arrangement, a franchisee would be well served to understand some of the most significant commercial leasing terminology, which we have undertaken to provide you with in-depth analysis.

A single net lease is a commercial real estate lease where the franchisee (tenant) is responsible for paying base rent plus one of the major property operating expenses, which is almost always the property taxes. In this arrangement, the landlord is still responsible for the other major operating expenses, such as property insurance and maintenance costs.

The distinguishing features and characteristics associated with a Single Net Lease:

• Tenant Responsibility: The tenant pays base rent and property taxes.

• Landlord Responsibility: The landlord pays for insurance, maintenance, and structural repairs.

• Less Common: Single net leases are less common than triple net leases because they offer less of a hands-off approach for the landlord.

• Lower Base Rent: Since the tenant is taking on the expense of property taxes, the base rent is typically lower than it would be in a gross lease.

Naturally, how the concept operates in the specific context of the particular lease agreement requires experienced legal analysis, such that you make the most out of your understanding of the commercial lease agreement for your franchise. For such legal analysis and advice for your franchise and its commercial leasing arrangements, we welcome you to contact franchisee lawyer Christopher Neufeld at 403-400-4092 [Alberta], 905-616-8864 [Ontario] or Chris@NeufeldLegal.com to schedule a confidential consultation.

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Franchisee Real Estate Lease: Build and Build-out - Although there are a multiplicity of factors at play when a franchisee is looking to commence their particular franchise operation, two of the more consequential aspects that the franchisee (lessor) needs to be aware of are the build (construction of the building) and the build-out (internal work on the leased premises). Read more.

 

Franchisor as Tenant (with Franchisee subleasing) - Whereas the typical leasing arrangement is for the franchisee to lease the subject property from the property owner (landlord); on occasion, the franchisor will lease the property from the property owner and thereafter proceed to sublease that same property to the franchisee. As opposed to the franchisee leasing directly from the property owner, having the franchisor enter into the lease with the property owner can be advantageous to the franchisee. Read more.

 

Contact us via email at chris@neufeldlegal.com or call 403-400-4092 / 905-616-8864.