Who pays for franchise tenant representation?

In most South Florida commercial leases the tenant’s broker is paid by the landlord from the leasing commission it has already agreed to, so the franchisee usually pays nothing directly. Where a landlord does not pay a cooperating broker, the fee is agreed in writing first, and every source of BreakThru Realty’s compensation is disclosed to the franchisee in writing.

What is a franchise lease rider?

A franchise lease rider, also called a lease addendum or collateral assignment of lease, is the set of terms a franchisor requires in its franchisees’ leases: notice of default and the right to cure, the right to take over the lease if the franchise ends, the right to remove the brand’s marks, and approval over assignment. BreakThru Realty puts it in the letter of intent from the start.

Should a franchise lease be as long as the franchise agreement?

Generally the lease term with its renewal options should cover at least the franchise agreement’s term, so that the franchisee is not left with a franchise and no location. BreakThru Realty negotiates the term and options against the franchise agreement, and the franchisee’s attorney reviews both.

Can the personal guaranty on a franchise lease be limited?

Often it can be negotiated: capped at an amount, limited to a period, or burning off after a number of years of on-time payment, depending on the landlord and the market. BreakThru Realty negotiates the guaranty in the letter of intent, where it is easiest to change.

Does BreakThru Realty represent franchisees if it also introduced them to the franchisor?

Yes, if the franchisee chooses. BreakThru Realty is paid by participating franchisors, under a written agreement, when a candidate it introduced signs a franchise agreement; candidates pay BreakThru nothing for matching. Where BreakThru also represents a franchisee in a lease or purchase, both roles and both sources of compensation are disclosed in writing before that engagement is signed, and the franchisee is free to choose other real estate representation.

Franchise Tenant Representation in Florida

The franchisee’s side of the lease, negotiated by a broker who knows what the franchise agreement needs from it

BreakThru Realty is a licensed Florida real estate brokerage that recruits franchisees for participating franchise brands and represents franchisors and franchisees in the Florida real estate behind each new unit. This page is the lease: what a franchisee’s broker negotiates, the clauses a franchise lease has that an ordinary retail lease does not, and how the franchisor’s own requirements are carried into it.

BreakThru Realty · Founder and Broker of Record: Tyson E. Sam, Florida License 3565210

Get Lease Representation · Lease Terms That Matter

Representing the Tenant

A landlord’s leasing agent works for the landlord. A franchisee signing a ten-year lease with a personal guaranty, often for the first time, needs someone on their side of the table who knows what the market will give. BreakThru Realty represents franchisees as tenants under a written agreement, from the first site tour to the signed lease and the delivery of the premises. Where BreakThru has also received franchise compensation from the franchisor for introducing that franchisee, that is disclosed in writing before the tenant representation agreement is signed.

How Tenant Representation Is Paid

In most South Florida commercial leases the tenant’s broker is paid by the landlord, from the leasing commission the landlord has already agreed to pay under its listing agreement, so the franchisee usually pays nothing directly for representation. Where a landlord does not pay a cooperating broker, the fee and who pays it are agreed in writing before the search starts. Every source of compensation BreakThru receives in connection with a franchisee, from a franchisor or a landlord, is disclosed to that franchisee in writing.

The Letter of Intent

Most of a lease is decided in the letter of intent, before the landlord’s lawyer drafts anything, and it is far easier to win a point there than in the fourth turn of a lease draft. BreakThru drafts and negotiates the letter of intent to cover every term the franchise needs: the premises, the term and options, the rent and its increases, the operating expenses, the tenant improvement allowance and the landlord’s work, rent commencement, exclusive use, signage, the guaranty, and the franchisor’s rider. The lease itself is then reviewed by the franchisee’s attorney.

Lease Terms That Matter to a Franchise

A franchise lease has to fit the franchise agreement as well as the building. The term should run at least as long as the franchise agreement, the permitted use has to match the brand’s full menu or service line, and the franchisee needs protection against a competitor opening two doors down. These are the terms BreakThru negotiates on every franchise lease.

Initial term and renewal options that cover the franchise agreement’s term
Permitted use broad enough for the brand’s full concept, including future changes
An exclusive use clause against competing concepts in the centre
Co-tenancy protection where an anchor drives the unit’s traffic
Signage rights on the building and any pylon or monument sign
Tenant improvement allowance, landlord’s work and the delivery condition
Rent commencement tied to opening or permits, with free rent where the market allows
Operating expense and common area maintenance caps and audit rights
A personal guaranty limited in amount or time, or burning off after a period
Assignment rights to the franchisor, another franchisee or a new entity
Radius restrictions and relocation clauses read against the franchise territory
Drive-thru, patio, venting, grease trap and hours, as the concept needs them

The Franchisor’s Lease Rider

Most franchisors require their franchisees’ leases to include a rider, sometimes called a lease addendum or collateral assignment of lease. It typically gives the franchisor notice of any default and the right to cure it, the right to take over the lease if the franchise ends, the right to enter and remove the brand’s marks and trade dress, and approval over assignment. Landlords are used to these riders but negotiate them, and a lease signed without the franchisor’s required terms can put the franchisee in breach of the franchise agreement. BreakThru puts the rider in the letter of intent from the start.

Buildout and Opening

The time between a signed lease and an open unit is where money is lost: rent starting before the permits are issued, the landlord’s work arriving late, a building that turns out not to support the brand’s equipment. BreakThru stays on the real estate side through delivery, tracking the landlord’s work against the work letter, the permit applications, the contractor schedule and the rent commencement date, so that the dates in the lease and the dates on site stay aligned.

Renewals, Relocations and the Next Unit

A lease is revisited long before it ends: renewal options with notice deadlines that are easy to miss, relocation clauses a landlord may invoke, expansion into the space next door, and the franchisee’s second and third units. BreakThru keeps each client’s critical lease dates, and negotiates the next lease with the last one in view, so that a multi-unit operator ends up with a portfolio of leases that work together rather than a set of one-off deals.

Get Lease Representation

Tell the broker of record about the brand, the Florida markets and the services you need: franchisee recruitment, market entry, site selection or tenant representation.

Broker of record direct: (786) 914-1017 · sales@breakthrurealty.com

How BreakThru Realty Works Within Franchise Law

Franchise seller status	BreakThru Realty acts as a franchise seller only for participating franchisors, only under a written agreement, and is named as a franchise seller on the receipt page (Item 23) of each participating franchisor’s Franchise Disclosure Document.
Disclosure timing	Nothing on this website is an offer to sell a franchise. A franchise is offered only through the franchisor’s current Franchise Disclosure Document, which a prospective franchisee must receive at least 14 calendar days before signing a binding agreement with, or paying any money to, the franchisor or an affiliate. The franchisor delivers the document. BreakThru never shortens that period, and never asks a candidate to sign or pay before it has run.
Earnings claims	BreakThru Realty makes no representation about the sales, income or profit of any franchise. If a franchisor makes financial performance representations, they are in Item 19 of its Franchise Disclosure Document, and that is the only place a candidate should read them.
Florida	Before BreakThru presents a brand, the franchisor confirms in writing that its annual franchise exemption notice under section 559.802, Florida Statutes, is filed with the Florida Department of Agriculture and Consumer Services and current. Florida’s Franchise Act, section 817.416, separately prohibits misrepresentation in the sale of a franchise.
Other states	BreakThru presents opportunities for Florida territories. A candidate who lives in, or wants a territory in, a state that registers franchise offerings or franchise sellers is referred to the franchisor directly.
Compensation	BreakThru Realty is paid by participating franchisors, under a written agreement, when a candidate it introduced signs a franchise agreement; candidates pay BreakThru nothing for matching. Where BreakThru also represents a franchisee in a lease or purchase, both roles and both sources of compensation are disclosed in writing before that engagement is signed, and the franchisee is free to choose other real estate representation.
Independent advice	Legal questions go to a franchise attorney, tax and structuring questions to an accountant, and financing questions to an SBA lender; every candidate should have the first two review the Franchise Disclosure Document and the franchise agreement before signing.

Questions Franchisors Ask

Who pays for franchise tenant representation?: In most South Florida commercial leases the tenant’s broker is paid by the landlord from the leasing commission it has already agreed to, so the franchisee usually pays nothing directly. Where a landlord does not pay a cooperating broker, the fee is agreed in writing first, and every source of BreakThru Realty’s compensation is disclosed to the franchisee in writing.
What is a franchise lease rider?: A franchise lease rider, also called a lease addendum or collateral assignment of lease, is the set of terms a franchisor requires in its franchisees’ leases: notice of default and the right to cure, the right to take over the lease if the franchise ends, the right to remove the brand’s marks, and approval over assignment. BreakThru Realty puts it in the letter of intent from the start.
Should a franchise lease be as long as the franchise agreement?: Generally the lease term with its renewal options should cover at least the franchise agreement’s term, so that the franchisee is not left with a franchise and no location. BreakThru Realty negotiates the term and options against the franchise agreement, and the franchisee’s attorney reviews both.
Can the personal guaranty on a franchise lease be limited?: Often it can be negotiated: capped at an amount, limited to a period, or burning off after a number of years of on-time payment, depending on the landlord and the market. BreakThru Realty negotiates the guaranty in the letter of intent, where it is easiest to change.
Does BreakThru Realty represent franchisees if it also introduced them to the franchisor?: Yes, if the franchisee chooses. BreakThru Realty is paid by participating franchisors, under a written agreement, when a candidate it introduced signs a franchise agreement; candidates pay BreakThru nothing for matching. Where BreakThru also represents a franchisee in a lease or purchase, both roles and both sources of compensation are disclosed in writing before that engagement is signed, and the franchisee is free to choose other real estate representation.

For Franchisors

For Franchisees

Related on BreakThru Realty