If you’re considering opening up a stand alone martial arts school, you’re about to enter into a whole new world when you go to sign a long term lease on a commercial space. It can be a daunting process and one that can leave you cross eyed. I should know, I just went through it recently and wanted to share my experience.
Starting My Martial Arts School
The decision to start my own stand alone martial arts school with a dedicated training space location was easy.
I had the money saved. There was enough students to make it happen. I had the instructors and assistant instructors I needed. I didn’t need to write a business plan.
The lease was the only thing that had me staring like a deer caught in the headlights.
The Nuts and Bolts of a Martial Arts School Lease
There were three elements to documentation I had to sign before getting started:
- Lease – The agreement between the lesee and property owner which includes the details of the lease including lease amounts, terms, dates, parking, specs, what’s allowed and what isn’t, and more.
- Guaranty of Lease – This document assures the property owner that you will pay for the space even if your business can’t pay for the space that you or your spouse will. The property owner wants to make sure they get paid no matter if you succeed or fail.
- Addendum – In my case, this included all of the specific changes I was going to make to the space (walls, windows, etc.) as well as the addition of a sign.
Each document posed its own challenges. My lease document was 13 pages long, the font size alone was microscopic, and the amount of times each section referred to another one was overwhelming. It was very difficult to keep things straight.
I read and reread that thing I don’t know how many times. I even read a ton online about lease negotiation. I read the martial arts business books by John Graden that had chapters on lease negotiation. I spoke with other martial arts schools to find out the “gottcha’s” that they experienced in their leases to make sure I avoided them. And more.
This is not legal advise. Be sure to consult a professional attorney and commercial Realtor before signing any lease.
Get Help From a Qualified Professional
I’m a marketer, not a commercial Realtor so I decided to get help. I wanted to make sure I was as protected as possible before signing and recommend you do the same. It will save you a lot of time, frustration, and is well worth the investment.
I made my notes and then sent the lease to a friend who was a commercial Realtor. I was lucky to have a friend in the business. That was a key move given that I’m no expert in lease negotiation. He gave me a ton of tips and ammo to go back with. There was a few things missing that I wouldn’t have ever known to ask about or would have ever really thought of.
He made sure they spelled out the type of lease (gross/full service lease) instead of it being vague and somewhat contradicting… what specifically they would pay for and what they wouldn’t… extending the due date to the 5th instead of the 1st… clearly spelling out how many parking spaces I had and which one… and more.
After going back with his recommendations, I got everything I wanted and was very happy with the final lease. They pushed back on a few things but overall were very fair. However, I’ve heard of other martial arts school owners not having such a smooth process and am glad to have avoided that situation.
Martial Arts School Lease Negotiation Tips
- Get educated. Read about the basics of leases and the various types (Full service, Net lease, Triple Net lease, etc.). Know the language before starting the process.
- Talk with other school owners who have leased commercial property. What would they do differently?
- Get help. Consult with a professional Commercial Realtor or Attorney. This is critical and necessary step.
- Everything is negotiable. And I mean everything.
- Ask for more than what you think your property owner will agree to; understanding that they will likely meet you half way.
- Ask for stuff you don’t really care about so you have things to give up in the negotiation process to get the stuff you really want.
- Understand each lease is different and there is no standard or universally accepted commercial lease documentation and agreements.
- The longer the lease, the more they’re willing to work with you on tenant improvement reimbursements. This can range from 10%-30% of your total lease.
- Get as much free rent as you can to build out your space before you open. I got 40 days which is perfect for what I needed.
- Decide whether you want to do the work or have them do it for you. I decided to do it myself as I was able to make the money stretch further (highly recommended).
- If it’s not in writing, it doesn’t exist.
- Remain patient. It takes a while to go back and forth. I think I paid more attention to this than when I signed for my mortgage!
- Read and reread everything. Be sure ALL of your requests make it into the final document. Don’t rely on your property owner to make sure everything is correct.
My martial arts school commercial lease worked out well for me and I was happy with everything I got out of it. It took some time, nearly four months when it was all said and done, but was well worth the effort. Now I’ve got a great location and have a great space.
What was your experience when signing your lease? What suggestions would you give a new school owner about to sign a lease?