Taking over lease of existing business - question

[cbmotorsport]

My wife and I are considering taking over the lease of a local business. The premises are owned by a wealthy local land owner. The lease has gone out to tender, and as a result they are asking for applications, with references and a comprehensive business plan.

There is no plan to change the nature or running of the business as is.

Anyway...It's the comprehensive business plan that I'm questioning. We have one of course and it's very detailed - it covers realistic projections over the course of the lease, but lists profits and incomes as part of that. Is it normal to ask for such things? Will it be used against us come rent review time (3 years). Should our business plan not include such figures?

Usually a business plan is presented to an investor and such detail is essential, but in this scenario we're trying to give the owner rental income.

[singlecoil]

I expect the landlords want to be sure that the prospective tenants have a viable business in mind, they don't want to be looking for new tenants after a couple of years (or months).

[Flat-6]

Is it a pub?

[cbmotorsport]

singlecoil said:

I expect the landlords want to be sure that the prospective tenants have a viable business in mind, they don't want to be looking for new tenants after a couple of years (or months).

Sure, we'd figured that out, but didn't know if it was common place to ask for a full business plan rather than just proof of funding.

[cbmotorsport]

Flat-6 said:

Is it a pub?

Nope, not a pub.

[surveyor]

It’s not common. I’m not sure I would be willing to share such a thing. In fact I know that I would be very reluctant

[edc]

Recently assisted drawing up a business plan for taking over an existing business and lease. The lease is town centre shopping centre unit. Quite honesty most of the figures were just made up and a little under cooked. The landlord and their agent asked zero questions about it.

[Wacky Racer]

surveyor said:

It’s not common. I’m not sure I would be willing to share such a thing. In fact I know that I would be very reluctant

Difficult one. Obviously they want to know you can afford the rental payments over the full term of the lease.

Overall though, I agree with surveyor.

[singlecoil]

Wacky Racer said:

surveyor said:

It’s not common. I’m not sure I would be willing to share such a thing. In fact I know that I would be very reluctant

Difficult one. Obviously they want to know you can afford the rental payments over the full term of the lease.

Overall though, I agree with surveyor.

I think everybody in that position would be reluctant. But if you want the lease and the landlord is insistent, how you feel about it or whether it's usual or not doesn't really matter

[edc]

singlecoil said:

I think everybody in that position would be reluctant. But if you want the lease and the landlord is insistent, how you feel about it or whether it's usual or not doesn't really matter

Quite. You're not even in the negotiation if that's what the landlord wants as a starting point.

[EVLATECOMER]

Sounds reasonable, personally I would only give my business plan if there was an NDA in place.

[Johnniem]

If they are sub-letting to you they are merely de-risking the letting. I agree with Surveyor as it really is not usual (but then my work is in central London offices so what happens outside that area may follow different rules). However, if you are taking over an existing lease (an assignment) then what your business plan is isn't really relevant as they will just walk away.

You don't make it clear whether it is a business you are taking over or just a premises lease. Who is 'tendering' the lease? (I presume that the lease is on the open market and is open to offers subject to the/your business - as the covenant- being accepted?)

I does seem a little strong to have to provide a business plan and certainly ask for an NDA.

Good luck!

JM