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Can a commercial landlord stop you from changing your business model?

On Behalf of | Apr 11, 2021 | Business law

Starting and maintaining a successful business typically requires both dedication and flexibility. You have to be willing to admit when something doesn’t work. Your initial business model, for example, may have involved solely online sales, but now you realize that having retail space is crucial for converting interested parties into actual customers.

Changing what your business does often means undertaking massive overhauls with employment and the space that the company occupies. You will have to invest substantially in those changes, so you need to establish how viable your new business model is before you start taking action. Can your commercial landlord prevent you from moving your business in a new direction?

Your lease could restrict your future business opportunities

Different landlords include different clauses in their leases. If you negotiated your rent based on a specific number of staff members and a very low estimated flow of foot traffic to your business, when those factors change, the demands you place on your landlord’s infrastructure will change as well.

Some landlords will simply want to renegotiate your common area maintenance (CAM) fees to reflect increased use of shared spaces like parking lots or restrooms. Other landlords may have included restrictive covenants or permitted use clauses that prevent you from performing certain business operations on their property. They might not allow customers on the premises or refuse to allow any kind of manufacturing.

Reviewing your commercial lease for restrictive covenants and other clauses that will limit your business options can help you determine if you can change your business model and stay at your current location. You may need to delay your planned changes, move your business or negotiate a new lease to move forward. An attorney can provide valuable guidance.