Lease Options When Buying a Business

Truforte Business Group - Brokers Blog

If you’re searching for a Florida business for sale, there’s a good chance that you’ll come across leasehold businesses for sale. The fact is that many businesses lease the spaces they are in. This helps businesses access desirable locations without having to spend too much. After all, the right location is important to the profitability of businesses with physical addresses.

If you’ve identified the business you want to buy and discovered it is a leasehold business, you will need to consider the lease as you negotiate the terms for buying the business.  There are three different lease options that you will want to consider.

1. A new lease

If the lease held by the previous owner of the business has expired, you as the buyer of the business will be required to negotiate for a new lease with the landlord. It would be best to do this prior to finalizing the purchase of the business. You may find that the business has no lease and the landlord is not interested in establishing a new lease with the new owner. The business may therefore not be able to remain in its current location. This could affect its profitability. You may also want to look into new locations to consider whether moving the business may be a better option.

2. Assignment of lease

This is a common form of leasing. If the lease is still valid, the seller of the business can assign the buyer the rights that are associated with holding the lease. This means that the business can continue to operate in the same location. This is possible when the lease is transferable. The seller simply transfers the lease to the buyer. It is important to note that the seller is not acting in the capacity of the landlord. A transferable lease simply gives them the ability to transfer the rights held with the lease to another party.

3. A sublease

This option involves creating a lease within a lease. Unlike assignment of a lease, the lease and all its rights are not transferred to the buyer. The sublease instead makes it so that the seller is leasing the space to you under their current lease. The landlord’s permission must be sought in order to do this. While this option allows the business to remain in its current location, the seller still has a presence in that you have sublet the location from them. It is best to negotiate for a new lease as soon as the seller’s lease expires.

Find more information here about what you should consider when buying a leasehold business. Contact Truforte Business Group for guidance. If you are new to buying a business check out advice for novice buyers here.

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