4 Important Questions to Ask when Leasing a Yoga Studio
Fire and foremost, let’s the boring legal stuff out of the way. The following blog post is an opinion piece and not valid legal advice. Please contact your attorney when making any legal decisions. If you’re more of a do-it-yourself kind of person, have a look at Amazon’s vast legal book section.
That said, rock and roll!
Congrats on starting the process of opening a yoga studio. We here at FitnessTexter have worked with quite a few yoga studios over the years, and we’ve seen some blossom into successful business (and some not so much). Here’s hoping that your business takes off.
So, you want to lease your first yoga studio. Prepare yourself, it’s going to be a bit of a long process. There are going to be many hoops to jump through and forms to submit, but in the end, you’re going to have a property that is all your own. Once you’ve got the property, you can install your yoga lighting, set up the front desk, and start being the yoga entrepreneur that you’ve always dreamed of.
Below you’ll find four of the main questions you should be asking your potential future landlords when you are looking at properties to rent. Make sure to see at least a half dozen properties. This will give you a good idea of the going rates in your city for properties as well as offer you the chance to see a lot of possibly layouts before choosing one. It might be very enticing to grab the first property that you see, but remember, the more you see the better you’ll be able to negotiate with your landlord. Anyways, on to the questions.
1. How long is the lease and/or contract?
Let’s be honest, in your head, you’re going to be the owner of your yoga studio for the next 20 years. It’s going to become the most beloved yoga studio in your city. Maybe you’ll even start a franchise. Whoaaaaa nelly! I know it’s easy to start daydreaming about your yoga studio’s IPO, but let’s start small and go from there. Most commercial landlords are going to want you to sign at least a 2 year lease your property. I personally think this is a perfect amount of time. It gives you time to set up your business, which could take at least three months or more. Once you’re set up, that only leaves you nine months left for business. You’ll need to start generating some yoga leads, create AdWords campaigns, etc. By the time you start having people come in your door, you’ll only have six months left on your lease. You get the point. You’ll want to talk to your landlord about your options to increase the length of the lease. If your business starts to take off, you’ll want to be able to extend your lease for three to five years. If you have no option of extension, you might get kicked out of your studio right when business is really moving.
2. Do you have the right to break the contract without penalty?
This is a touchy subject, but one you’re going to need to think about before you start your business. There’s a chance it will fail. You might do your damn best to keep it afloat, but sometimes, you just can’t help a failing business. It’s not always your fault if it fails. Many times the economy of your city just can’t support another small business. However, you’ll want to ask the landlord about penalties if you need to break the lease. If you run out of liquid capital at month seven and you can’t pay the next five months of rent, you’re going to need to break your lease. Will the landlord just keep your security deposit? Will your landlord request that you file bankruptcy? These are things that you’re going to need to figure out before you sign that lease. Most landlords will keep the security deposit and walk away. They’d rather have the money than take you to court for the months of rent you’ll miss. They might also keep your equipment as payment for the upcoming months. Once again, do your research because you don’t want to be at the end of a broken lease lawsuit.
3. Can you sublet out the space if you so desire?
Maybe you have class on Monday morning and Monday night. Well, you’ve got a big chunk of time there between 10am and 4pm when your space is going unused. You can either try to fill that spot with another yoga class, which might be difficult since you’re just starting out, or you might want to think about subleasing the space to a pilates instructor. It’s a great way to cross-pollinate your business with the pilates business and a more efficient use of space. However, you’ll need to talk with your landlord to see if you can sublease the space when you’re not using it. They might not care since you’ll be the one paying rent, or they might want to increase your rent because they know that you’ll be making money off their space. When you’re looking at properties, make sure to run this idea past the owner of the property. Mention that you might want to allow another business to use the space when you’re not there and see what she/he says about the idea.
4. Is it a fixed-price long-term lease or is there a yearly price increase?
Last but not lease, make sure you talk with your landlord or leasing agent about the future price of the unit. There’s usually two ways they will go about price increases. One, you sign a long-term lease and the price stays fixed during the entire time of the lease. Two, they will let you sign a one-year lease, but they’ll have the ability to increase the rent a certain percentage every year. Long-term rental contracts are nice for landlords, because it removes a significant amount of stress from their lives. They can focus on their other properties since they know they have guaranteed income from yours. With the ability to increase rent every year, they might make more money, but they have to find a new tenant if the current one doesn’t want to pay the increase or is having a slow year of business. You’ll want to sit down with your business attorney and figure out which option is the best for your business. If you have lots of liquid capital, you can sign a long-term lease and not worry if you have a slow year, you’ll still have the money to pay the lease. If you DON’T have a lot of capital on hand, you might want to take the one-year lease. This won’t tie you down for years to come if your business fails. However, if your business is successful, you’ll end up paying more rent the following years. Your choice; think it over well.