Leasing Retail Space
You are planning on starting a small retail business and want to
rent space in a small strip mall. The mall owners want me to
give them a financial statement, which is normal; but they also
want your business plan, you think this is odd. Why would you
have to give them this type of document, and how much actual
detail do they want? Do you have a legal obligation to provide
it?
Potential landlords want a business plan for two reasons. The
first is that they most likely have commitments with the other
tenants as to what types of businesses can be in the mall or
strip plaza. As an example, they may have committed that there
will be no adult stores. Many malls and strip plazas also have
non-competition clauses in their leases. This means that they
will only allow one type of store - one lady's wear store, one
shoe store, etc. By having your business plan, you're committing
to a business style, in writing. If you change and become a
competitor of another tenant, they will be able to cancel your
lease. By having, your business plan there can be no
misunderstanding of what you said you were planning on selling.
Second, they want to be reasonably confident that you are going
to survive; they want to feel that you have thought out and
planned the business. Landlords of malls and strip plazas do not
like vacant stores and neither do other tenants. Having tenants
come and go gives the shopping location a bad reputation.
There are no laws preventing a prospective landlord from asking
for a business plan. On the other hand, there are no laws that
require that you give one. You can always tell them that you do
not have a plan or are not willing to provide it. If that is a
deal breaker, so be it, you will go elsewhere. Whether they will
demand it or not depends on how easy it is for them to get other
interested tenants.
Remember that their lease is not a "cast in stone" document
until you sign it. Read it over and make changes and exceptions
as you see fit. I recommend you take it to a lawyer. The lease
they hand you will be very one-sided giving them everything and
you nothing. It's only a starting point for negotiations.