One way ticket to Paris, please 🥐

We're always talking about how LONG retail leases are...

"Longer than most first marriages!"
"Longer than a presidential administration!"
"Longer than undergrad!"

But sometimes life happens, plans change, and even if your business is humming along, there may be a time when you need to exit your lease before the expiration of the term (translation: get out before you're supposed to).

Since we sign leases with the intention to stay for the whole term (and maybe longer with some renewal options), the instances when we want or need to exit early really are (and should be) rare. Obviously if your business is not succeeding and the end times are nigh, that's a clear occasion where you'll exit your lease whether you like it or not.

There are, however, times when you could stay, but you’d really prefer to go. I like to call these moments "When I win the Powerball."

When I win the Powerball, I'll pay off my mortgage and promptly buy a fabulous Parisian condo in a building with an elevator and air conditioning. Now if I'm also still bound to a commercial lease for another few years, and I can't just pack up and head to my new arrondissement immediately, what are my options?

Can I just keep paying rent but not operate my business?
In most cases, no. Most retail leases contain a clause about “continuous operations,” which basically means that you have to operate your business on a regular basis…you can’t just go dark and keep mailing in rent checks.

Every lease will have different requirements for what is considered “continuous.” Some landlords may require you to be open seven days per week (think major shopping centers), and some may be much more flexible (think restaurants that are closed Mondays and Tuesdays), but even with flexibility, it’s most likely that you won’t have the option to go dark indefinitely.

Can I sublet my space or transfer the lease to another business?
Maybe, though definitely not without restrictions. “Assignment and Sublet” provisions are among the most important and most likely to be neglected by first-timers negotiating leases, because unless you know to ask for them, you won’t get ‘em.

Landlords almost never offer them up voluntarily, because they don’t want you to transfer the lease to anyone else – they want you to honor your lease obligation through the lows of a pandemic or highs of Powerball. So if you’ve successfully negotiated these terms into your deal, you can certainly expect your landlord to have approval rights, but at least you’ll know you have the option and what will pass muster with the landlord should the time come.

Why can’t I just pack up and make a break for it under the cover of darkness?
That personal guaranty holds you tight -- the way I hold a fresh baguette. Since landlords know that minds change and priorities change, the personal guaranty is what ultimately keeps you accountable to your lease obligation.

So even if I cleaned out my store, donned a tres chic disguise, and took the red eye to Charles de Gaulle, I’m still on the hook for my lease – or at least however much of it is guaranteed. Technically I could call my attorney and pay her to try to negotiate an exit with my landlord where I'd certainly have to pay most (if not all) of the amount owned under the guaranty, but that's certainly not free.

So if you're signing a commercial lease, the best ways to prepare for winning the Powerball – or possibly wanting to exit before the term is over – are:

Budget for a manager from the get-go, so at least YOU can visit your condo in Paris regularly while your staff runs the day-to-day...at least until your lease expires.

Negotiate favorable assignment and sublet terms so that you have the right to transfer the lease to someone else with the approval and blessing of you landlord

Restrict your guaranty as much as you can so that the penalty for leaving early is limited (good thing you have a fabulous broker negotiating your lease!)

Au revoir, mes amis!