All Forum Posts by: Courtney Duong

@Ronald Rohde I just PM-ed you.  Please take a look.  Thanks.

@Joel Owens thanks for the input.

I hope I didn't confuse you, but the franchisee we kicked out at the end of last year was Fit Body Boot Camp.  And the potential tenant who wants to move in asap now is a martial art (and they are currently have another one at a different location which seems to be doing ok).  I remember you told me all about those gyms and martial art business a couple months back and we have been trying to avoid them.  Just that this space is 2350 sq ft and has been sitting vacant for almost a year now and it is hard to lease out a unit of this size for that location.  We have been getting calls/interests for the other 2 units but rarely for this one.  So we definitely want to split it up in 2 but not now due to the cost of doing so.  Plus, we think if we have a good tenant then maybe it's better to do the splitting at that time.  That way, tenant can build to fit their needs.  

So, for this martial art guy, he offers to pay 2 months in advance. I said yes, no TI, 3 months free (still pays NNN for these 3 months), 2 months of rent in advance, 2 months deposit and he is ok with it. We also told him the base rent is at a deep discount due to Covid so we are only going to sign for a 1 year lease, after that if he wants to stay then it's a new lease and will be at market rate. That's when I started to read the old lease with Fit Body Boot Camp and found out that we were supposed to notify the Franchisor of our intent to terminate the lease with the franchisee and looks like our property manager (and the commercial attorney that he hired at that time to handle the termination of lease) did not send any notifications to the Franchisor!!! The martial art guy would like to start asap and we just want him to move in for now to bring more foot traffic to the center while waiting for this Covid thing is over. Once Covid is over, I think we can find a good tenant to replace him because this is a good location.

Tomorrow I will reach out to Andy and/or Ronald asap to talk about the default of Fit Body Boot Camp the franchisee to the Franchisor.

Last week we had an interest in a smaller unit.  It is a national bakery franchise.  But we had to turn them down due to our prohibited uses agreement with our current tenants.  The week before we did turn down that Thai massage parlor that we talked about in another post.

Great input/insight/advice as always Joel.  I really appreciated it!  Thanks!

It is Fit Body Boot Camp.  The tenant (franchisee) already moved out at end of last year and the unit has been vacant.  We have a potential tenant who wants to moved in asap so we definitively want to end it with Fit Body Boot Camp.

@Ronald Rohde have you dealt with something like this before?  Thanks.  

We manage a commercial property (retail, multi-tenant) and had a fitness tenant (a franchisee) who went dark late 2019 so we terminated the lease (they still owe us 3 months of rent).  Given that our property manager was a newbie he did not notify the Franchisor of this termination.  I just happen to look at the lease now and see that we were supposed to notify Franchisor of anything that happened.  

Here is what it says in the lease:

FRANCHISEE DEFAULT NOTIFICATION.  Landlord agrees to furnish XXXX, Inc. ("Franchisor") with copies and all letters and notices to Tenant pertaining to the Lease and the Premises at the same time that such letters and notices are sent to Tenant addressed to XXXX at YYYY Attention: Real Estate Compliance & Notification Department.  Landlord further agrees that, if it intends to terminate the Lease, the Landlord will give Franchisor the same advance written notice of such intent as provided to Tenant, specifying in such notice all defaults that are the cause of the proposed termination.  Franchisor shall have the right to cure, at its sole options, any such default within the time periods granted to Tenant under the Lease.  If nether Tenant or Franchisor cures all such defaults within said time periods (or such longer cure periods as maybe specifically permitted by the Lease), then the Landlord may terminate the Lease, re-enter the Premises and/or exercise all other rights as set forth in the Lease.  Prior to the expiration or termination of the Lease, Franchisor shall have the right to enter Premises to make any reasonable modifications or any reasonable alterations necessary to protect Franchisor interest in the Franchisor business and the Proprietary Marks and System (as such terms are defined in the Franchise Agreement), or to cure any default under the Franchise Agreement or any development agreement entered into by Franchisor and the Tenant or under the Lease, and Landlord and Tenant agree that Franchisor shall not be liable for trespass or any other crimes or tort. 

This unit is still vacant as of now and yesterday we had someone reached out to us expressing interest in leasing it.  Before getting into that I want to take care of the formality with this Franchisor the correct way so everything will be clean and clear.  Given that we already terminated the Lease with franchisee without giving any notices to Franchisor what are our options now?  Be honest and send notification to Franchisor saying we already terminated the Lease with franchisee already?  Or pretend nothing happened yet and tell them now that we intend to terminate the lease with franchisee?  Is this something simple enough that we can take care of ourselves by communicating correctly with Franchisor?  Or should we consult with an attorney?

Any input/advice is greatly appreciated.

Thanks.

@Joel Owens can't wait until you launch your NNN podcast and your new book. I for sure will buy at least 2 copies of your book, 1 for myself and 1 for my nephew.

I am glad you mentioned 1 year at reduced rate then market rates when Covid goes away if we sign new lease during this time because I was thinking of that too.  Now that you said it, I will definitely give that idea a try next time we are in lease negotiation.

Great input/insight as always Joel.  Thanks.  Have a good weekend and stay safe and healthy.

@Joel Owens how are you doing Joel?  Haven't seen you here often.  Must be super busy still?  We are super busy here on residential side I barely have time to breathe! On commercial side we want to give it a little more time before buying more.  When we are ready for that I will reach out to you again.

Yup, not worth it at all. Yesterday we had a tenant rep broker reached out to us saying he has a potential tenant (franchise, pastry type of store) who expresses interest in our space but after checking our exclusive agreement with one of our tenants it will violate that agreement so had to turn them down.

@Ronald Rohde This is their startup but she has been working in other parlors.  I was thinking of hiring Jerel to handle this if we decided to lease to this couple.  But then right on that day there was a post on NextDoor about those massage parlors and exactly like Jerel said most of them are not legit so we decided to skip.  We rather have a vacancy then be part of something like this if they turn out to be not legit.  Our current tenants are good businesses who are doing good even during this covid-19 so we intend to keep it that way.

When I was in CT once in a while we would have a massage therapist came into the office and for a day and I used to get one here and there whenever I was so stressed out.  Real, legit massage parlors are good.  My dilemma is, I have no way of knowing for sure if this one will be a legit one or not.  Been looking at complaints report for that area and it seems most of them are bad.