Florida Franchise Lease Lawyer | Commercial Lease Negotiation for Franchisees

Aspiring entrepreneurs often choose franchise opportunities instead of starting a business from scratch. Working with a franchisor can offer real advantages, including training, marketing support, and built-in demand from an established brand. But franchise ownership also comes with structural risks—especially when the franchisee must secure a commercial lease to operate the business.

Commercial leases, like franchise agreements, are complex contracts. When a franchisee signs a long-term lease that does not align with the franchise agreement, the result can be expensive liability and reduced control over the business. Franchisees negotiating leased commercial space should pay close attention to the following issues.

Key Lease Terms Franchisees Should Address

1) Securing Franchisor Assignment Rights

Franchise agreements often run for a set term with renewal options. Commercial leases also commonly span multiple years. If a franchisee defaults, sells, or loses the franchise before the lease ends, the franchisor may want the ability to take over the location to protect the brand and preserve the site for a replacement franchisee.

This is why many franchisors require the lease to include assignment provisions (or collateral assignment terms) that allow the lease to be transferred to the franchisor under defined circumstances. Without proper language in the lease, a franchisee may be stuck with rent obligations even after losing the franchise.

2) Limiting Nearby Competition

Franchisees usually rely on territorial protections—either formally through the franchise agreement or practically through brand planning. But even if there is no identical franchise next door, the landlord may still lease nearby space to a direct competitor offering substantially similar products or services.

Negotiating an exclusivity clause (or use restriction) can help reduce the risk of a landlord placing a competing business in the same shopping center or commercial development. While landlords often resist broad restrictions, targeted limitations can protect the franchisee’s ability to attract customers and generate foot traffic.

3) Complying with Franchisor Build-Out and Operational Requirements

Many franchisors impose strict standards for build-out, equipment, signage, and operational layout. Some franchisees use build-to-suit leases to ensure the premises meet those standards from day one. Others must negotiate tenant improvement rights so they can remodel, install compliant equipment, or make other modifications required by the franchise system.

Franchisees often benefit from a coordinated review of both the franchise agreement and the lease to confirm:

• They have clear rights to complete required modifications
• The landlord’s approval standards are reasonable and not open-ended
• Construction timelines and delivery conditions match the franchisor’s launch requirements
• Repair and maintenance responsibilities are properly allocated

Common Franchise Lease Pitfalls to Avoid

Beyond the three core issues above, franchisees should watch for common lease terms that can undermine profitability or create personal exposure:

• Excessive personal guarantees: Many landlords demand personal guarantees, putting personal assets at risk if the franchise fails.
• Radius restrictions: Some leases restrict opening additional locations within a certain area, limiting growth.
• Uncapped CAM charges: Common area maintenance fees can spike without proper caps, audit rights, and clear definitions.
• Conflicting termination rights: A franchise agreement may terminate earlier than the lease, leaving ongoing rent liability unless protections are negotiated.
• Weak signage rights: Signage is often critical to franchise success—visibility and placement terms should be specific.

Franchise Leasing FAQ

Should I sign the lease or the franchise agreement first?

Ideally, neither should be signed until both are reviewed and aligned. In practice, franchisors often require approval of a location early. If that is the case, the lease should be contingent on franchise approval and structured so the lease term, renewal options, and assignment rights fit the franchise agreement.

What happens to my lease if the franchisor terminates my franchise agreement?

Unless the lease includes a co-terminosity clause (which landlords rarely agree to), the franchisee typically remains responsible for the lease even after losing the franchise. This is why assignment rights, sublease options, and exit strategies should be negotiated before signing.

Can I negotiate the lease even if the franchisor found the location?

Yes. Even when a franchisor has a preferred landlord relationship, the franchisee is still the tenant and can negotiate key terms such as rent, term length, renewal options, CAM caps, default provisions, and transfer/assignment rights.

Do I need an attorney to review a franchise lease?

Yes. Franchise leases are often high-dollar commitments over many years, and small mistakes can create major financial exposure. Legal review helps ensure the lease and franchise agreement work together and that the franchisee’s risk is controlled.

What is a collateral assignment of lease, and why does my franchisor want it?

A collateral assignment typically gives the franchisor the right to step in and take over the lease if the franchisee defaults under the franchise agreement. This protects brand continuity and allows the franchisor to preserve the location for a replacement operator. The exact scope and triggers should be carefully reviewed to prevent overreach.

Protect Your Franchise Investment Before You Sign

Negotiating a franchise agreement and a commercial lease at the same time can be challenging even for experienced business owners. Getting legal guidance before signing can help you avoid long-term liability, reduce operational risk, and start the franchise in a stronger position.

For help reviewing and negotiating a franchise lease in Florida, contact Bernhardt Riley, Attorneys at Law, PLLC at (727) 275-9575.

Commercial leasing guidance: verify zoning requirements and lease compliance with local rules and counsel.