How do I read a retail store’s lease clauses about signage and storefront changes?
Find the clauses on signage, alterations and the exterior, then ask whether the landlord must approve each change and whether the current sign is actually allowed. Check who pays to remove or restore things at the end of the lease, because small storefront changes can become costly obligations.
Retail depends on being seen, so read these clauses closely. Look for wording on the sign above the door, window graphics, sandwich boards, awnings and lighting. Note whether the landlord’s approval is needed, how long it takes and whether it can be refused for any reason. Compare what the lease says with what is on the building today. Signs that were never approved can cause trouble.
Next, look at who pays. Some leases make the tenant remove signs and repair the wall when the lease ends. Others restrict changes to a landlord’s design standard, or give a mall control over every storefront in the building. If the plan is to rebrand after buying, ask what that would require, and whether the landlord has to consent to an assignment of the lease.
Talk to the landlord early. A letter confirming that the present signage is acceptable is useful to hold. Add it to the due diligence file along with the lease. Ask your lawyer to read the whole document with you, since sign rules also appear in local rules that only a professional can interpret for your location.
Key takeaways
- Compare the lease wording with the signs and storefront as they stand today.
- Find out whether the landlord can refuse or delay approval of changes.
- Ask who pays to remove signs and restore the exterior at lease end.
- Request written confirmation that the current signage is acceptable.
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Sources
This answer is checked against primary sources. Links were last confirmed on the dates shown.
- 01Business Development Bank of CanadaGovernment13 terms you need to understand before signing your commercial real estate lease
- 02Business Development Bank of CanadaGovernmentHow to conduct due diligence when buying a business
- 03Federal Economic Development Agency for Southern Ontario (FedDev Ontario)GovernmentUnderstanding your business lease
- 04Business Development Bank of CanadaGovernmentWhat are the steps to buying a business?
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