The restaurant lease

Part 1: Contractual partner, term & lease

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The lease agreement

1. Contracting party

Is the contractual partner a private individual or a company? This is not only important when it comes to the right of withdrawal. (see separate point)

1.1. A private individual as a contractual partner: Here, the contractual partner concludes the lease agreement as a private individual, but this means that this is a business transaction and therefore the legal transaction is not concluded privately as a consumer. "Private individuals often also have a business or are self-employed. If such a person concludes a legal transaction objectively for a purpose that cannot be attributed to either their commercial or their self-employed professional activity, they are acting as a consumer. The only exception to this is if the circumstances known to the contractual partner clearly indicate that the private individual is acting in pursuit of their commercial or self-employed professional activity. This is the view of the Federal Court of Justice (VIII ZR 191/19)."

1.2. A corporation as a contractual partner: "Check who you are signing" is the motto. A corporation can usually disclose its capital resources or have them checked by service providers. However, a GmbH, for example, is usually only liable up to €25,000, which does not mean much security in the case of a restaurant lease. A liability clause in which a private individual is liable for all liabilities resulting from the lease should definitely be part of the contract.

1.3. The contractual partner is to be a corporation that has yet to be founded. We advise against this! In this case, there are two options: A right for the lessee to sublease to the operating company that has yet to be founded. Option 2: to include the operating company as such in the lease agreement.

In general, it can be said that a lease agreement is of course a matter of trust. You trust the tenant not only to run the restaurant successfully, but also to handle his financial transactions correctly.

 

2. Contract object

In addition to the area that is being leased, which is best specified using a floor plan, it is also often about inventory that is included and is to be leased along with the property. It is very important here to list the (large) inventory precisely with its name and manufacturer. An inventory list should be created and then serves as an attachment to the lease agreement. Nowadays it is no longer common to also provide the small inventory (crockery, cutlery, etc.) and lease it along with the property. The effort involved in creating such an inventory list would also go beyond the scope of this article.

3. Lease period

The duration of a lease is of course negotiable. As a rule, however, the period should not be set shorter than 5 years. Why? A restaurateur also has start-up costs to start operating his restaurant. As in any profession, it takes a certain amount of time until the restaurant has made a name for itself and regular customers come. An option to extend the lease can also be included in the contract. At the very least, it is essential to regulate what will happen after the first lease period has expired.

 

4. Rent

The rent in the restaurant lease is also freely negotiable. The amount of the rent depends on previous or expected sales. ( see separate article on this ) A staggered rent, especially for the first three years, helps the restaurateur to get off to a good start. We advise against linking the rent purely to sales for various reasons. The modus operandi is very complex and requires external service providers when it comes to certifying sales. This causes additional costs. Otherwise, transparency and thus the correct reporting of sales cannot be guaranteed. The relationship between lessor and lessee would thus be clouded.