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Should you negotiate for exclusivity in your commercial lease?

On Behalf of | Jan 31, 2023 | Commercial Real Estate |

When you are looking to open a new location for a startup or long-running business, it can be exciting when you find the perfect commercial property to suit your needs. It is important, however, to ensure that your commercial lease contains all the necessary clauses and is not weighed heavily against you as the tenant.

An exclusivity clause is one such element to look for in your lease. When you understand the benefits of having exclusivity as a business, you can decide if it is worth negotiating the matter with your landlord.

What is an exclusivity clause?

A favorable exclusivity clause guarantees that your landlord cannot rent out a nearby property to a party that may be a competitor to your business. Renting a commercial property is a significant investment that entails making meticulous financial projections, and an exclusivity clause serves as a sort of protection for that investment.

What can you do if your lease does not guarantee exclusivity?

A lack of exclusivity can lead to a situation in which a direct competitor to your business opens up nearby and significantly cuts into your profits, possibly making it necessary to move your business elsewhere. Massachusetts tenant rights provisions explain that you can break a tenancy-at-will arrangement by providing notice one full rental period in advance. Exiting a binding lease agreement, however, might require a buy-out payment, a lease assignment or more involved legal action.

Negotiating for an exclusivity clause can be worthwhile because it protects your investment and saves you from a troubling situation in which you might have to try to break your lease. If your landlord violates your exclusivity clause, a knowledgeable team can help you protect your rights.