Signing a Lease: What You Need to Know

1. Signing a Lease:What You Need to Know Presented by Bob Eisenberg President of Qualclean Equipment

2. Navigating through a tenant lease can be very complicated • What terms will you accept? • What terms will the landlord accept? • It can be different for every lease and can be a bit like “horse trading.” There is no magic formula just many pieces to the puzzle • We will attempt to examine both sides in this presentation • You must pay careful attention to the details, and there are many • And you should involve your attorney in the process to protect your interest, the landlord certainly does Overview

3. A Laundromat owner will invest substantial monies in the ground that cannot be taken with the equipment, therefore it is very important to negotiate a long term lease. Types • 20 years is typical • 10 years with (2) 5 year options • 5 year term with (3) 5 year options The Goal - Get to 20 or more years with all of the rent increases negotiated up front at the onset of the lease. First: The terms

4. You want to pay less • The landlord wants more • You must plug the rent payment into your cash flow forecast and make sure you can afford the rent • It is also helpful to convince the landlord to provide lower rent for the first few critical years of a new business • You must sell the landlord on the assets of having a Laundromat as a tenant; which is it will become a long-term tenant and the anchor or sub anchor in any shopping center. How much rent?

5. If you are building a new store it is not unreasonable to ask for several months of free rent to build out the store, I typically ask for 120 days (sometimes 180) or when the store opens whichever comes first. It is also not uncommon to request some landlord contribution to your build out, sometimes they will, sometimes they will not, but if they will, it will usually reflect in your rent Free Rent? Plus build out

6. On top of your base rent you will hear the term “CAM” or “Triple Net”; that is your proportionate share of: • Taxes • Insurance • Common area Maintenance You are responsible for your share which is your % of the entire center, if you have 20% of the space, you pay 20% of the costs. A lease without CAM is called a Gross lease, it is all inclusive CAM or “Triple Net”

7. Before signing a binding lease, you must make sure, or your lease must be contingent upon obtaining local zoning and permits to build a Laundromat. Zoning and Permits

8. Before signing a binding lease, or you must make it contingent upon obtaining proper utilities which typically are: • +/- 600 to 800 amp electrical • +/- 2 to 4 in. water (depending on pressure) • +/- 2 & ½ to 4 in. gas (depending on pressure) • +/- 6 to 8 in sewer Your local distributor or a licensed engineer will confirm the proper utilities needed, which varies from store size and local conditions Utilities

9. Use to include self-service Laundromat, drop off laundry, and dry cleaning (if you intend to do dry cleaning) Or any other service you intend to provide Tenant wants exclusive right for self service Laundromat, drop off laundry and dry cleaning within the center (again if you plan to offer dry cleaning) Or any other service you intend to provide Use and non-compete

10. Landlord shall provide space on the exterior building directory (if there is one) and tenant shall have the right to put a lit sign on the building above the space (You may also have to check with local sign regulation and ordinances and either comply or go for a variance if you want to put up a larger or different sign that currently allowed) Signage

11. Tennant should have access to the premises 24 hours per day, 365 days per year. Further, as long as local regulations permit, the tenant can operate a 24 hour business Access

12. The rest is negotiated, but remember the more the landlord does, it typically reflects in higher rent (which may be OK) • HVAC in good working order by landlord Basic Tenant Improvements

13. The building (landlords)shall comply with all local building codes including handicapped parking requirements Building Codes ADA Compliant

14. Tenant (you) should be prepared to discuss financial guarantees, most will sign personally, most times husband and wife • You will have to offer financial information • Tenant (you) will typically put two months rent in advance • Try to limit it to the first term of the lease • Try to offer a cross corporate guarantee if you own another company that has assets Financial Guarantees

15. Leases are written in “leagleeese”, there are many clauses in the lease written for the landlords advantage one in particular: look for default clauses and ask for times to cure • However it is imperative that you have a professional look through the lease and give you proper advice, the landlord expects there to be changes, no lease is the same. Most leases are long and complicated

16. The lease is the heart and the soul of your business. The equipment as used equipment is worth very little, it is very important that you negotiate a good, fair lease for you and your landlord; then when you sell or renew it will be worth it’s weight in gold. Conclusion

17. Questionsand Answers

18. Thank you for attending! Signing a Lease:What You Need to Know By Bob Eisenberg, President of QualcleanEquipment marketing@coinlaundry.org | www.coinlaundry.org | 800-570-5629 download this presentation Later by logging into your member account at coinlaunry.org& click on Educational Library to view Webinar Education