A lease sets the real cost and flexibility of a location for years. Many first-time operators focus on the headline rent and discover the harder terms later. Reviewing the commercial detail early — ideally before you are emotionally committed to a space — is where a lot of avoidable cost is saved.
Lease term, lock-in and exit
Understand the tenure, the lock-in period during which you cannot leave without penalty, renewal options and the notice required on either side. A long lock-in protects the landlord; make sure it is a period you are comfortable committing to given the uncertainty of a new outlet.
Rent escalation and recurring costs
Look beyond year-one rent to how it escalates, and to the recurring charges around it — common-area maintenance (CAM), taxes, utilities and any other fees. Ask for these to be stated clearly so you can model the true occupancy cost over the lease, not just the opening figure.
Deposit and payment terms
Check the deposit amount, the conditions and timeline for its return, and the payment schedule. Deposits are often several months of rent and tie up working capital you will want for fit-out and launch.
Fit-out, rent-free and handover
- Is there a fit-out or rent-free period before paying rent begins?
- What condition is the space handed over in, and what must you restore at the end?
- When can you access the space to start work, and does that align with your opening plan?
Use, signage and restrictions
Confirm your intended business use is permitted, along with signage, operating hours, alterations and any shared-facility rules. A restriction on hours or signage can materially change a hospitality business's viability.
Get commercial and legal review
Commercial review helps you prioritise which terms to negotiate and which questions to raise. A qualified legal professional should review the actual legal interpretation and drafting before you sign. The two are complementary, not a substitute for each other.