Putting salon up for Lease! How does it work?

[Ann1234]

Hi All,

Looking for some advice from those more experienced than myself.

I am the owner of a hair & beauty salon and I have to move to the US next year with my husband’s work. Given the current market I don't think we would get anything like what we put in if we were to sell it so we are thinking of leasing out the salon.
Does anyone know anything about this? Ideally we would look for our current manager to take it on but at the moment we don't even know how to propose the idea.

Does anyone have any advice or info or could answer these questions?

-What is covered in the terms of the leasing?
-how do you figure out what to charge for the lease?
-What are the exit clauses if they wanted to opt out?
-What if they run your salon into the ground and then want out?

Look forward to hearing from you,
Ann

 

[Lou_Lou]

Do you own the freehold of the building?

 

[trozzina]

Hi Ann,

I'd strongly suggest you talk to a solicitor and/or very good commercial property agent. You really need an expert here, especially if you're moving so far away.

So much will depend on the conditions you're tied into at present so you need to understand that situation thoroughly as well as working out a value for the business and the terms of handing it over.

It'll cost you to get the experts in, but you really can't afford to get this sort of thing wrong. Most solicitors will have an initial chat with you free of charge so you can shop around and find the right firm for you without any committment.

Good luck with everything

 

[Ann1234]

Lou_Lou/Trozzina thank you both for your replies.

No we don't own the freehold just the leasehold with about 13 years left on the contract with the option to renew then. We took over the premises a couple of years ago and transformed it into a hair and beauty salon. The rent is the easy part I hope, the contract with the landlord is just transferred to the new tenants and then they pay every month. The part we are struggling with is how to put the value on the established business. Do we charge what we need to cover in terms of our loan and any outstanding bills or is there some sort of market value for the business?

Do solicitors specialise in this type of agreement? I don't know any in Ireland but perhaps that’s just because I've never looked!

 

[Lou_Lou]

Firstly you need to check whether you can sub let under the terms of your lease. If you can and want to go down this route, which could be a risk, you definately need professional advice.

If may be worth having the business valued, your accountant may be able to help with the valuation of the business. Speak to local commercial agents to see what the market is like. If you have a good business your manager may jump at the chance to own a business. Check your lease to see if you remain responsible for any unpaid rent until the lease expires, some old leases revert back to the original owner in this instance.

We sold one of our salons a couple of years ago, it took a while but we got there in the end.

Best of luck!

 

[trozzina]

Hi Ann,

Good advice from Lou_Lou there, I'd say.

Assuming business is okay, you have clients, client records, stock, and are actually taking money then the business will have a value.

I'd also recommend getting a commercial agent to help you work it out. They'll need to go through all your books of course, and will take into account market conditions etc etc but they'll know better than anyone what's achievable.

If you don't know who your local agent is then I bet your solicitor will, and you'll still need one of those anyway.

Good luck