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Should your commercial lease have an exclusivity clause?

Leasing a commercial property is an exciting time for a business owner. After finding the perfect location for your new storefront, you can reap the benefits of your good management and planning up to this point.

Before signing that lease, however, you should check the document for an exclusivity clause. Without this provision, your business might suffer later and you could find yourself in a heated commercial real estate dispute.

Why you need an exclusivity clause

An exclusivity clause in your lease agreement states that the landlord cannot rent out to another business owner who might be a competitor to you. In a worst-case scenario, a store offering similar products might open up right next door and cut deeply into your sales. You should view an exclusivity clause as a safeguard for your financial future and the investments poured into your business thus far.

What to do if you do not have an exclusivity clause

If you cannot negotiate an exclusivity clause and feel that you must rent the property regardless, you should take some necessary precautions. Florida statutes on the landlord and tenant relationship state that you may terminate a tenancy at will by giving as little as seven days’ notice if your tenancy is on a week-to-week basis. By opting for a shorter renewal period, you give yourself the option to quickly vacate the property in the event that a competitor emerges nearby.

Every business owner should advocate for an exclusivity clause in their lease, especially when renting space in a mall or other property where many businesses exist in close proximity. The unexpected emergence of a competing business can dramatically upend months of investments and carefully-laid financial planning.

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