Restaurant lease agreement? Avoid mistakes and ensure success! Discover the most important clauses, tips on taking over inventory and information on termination.
The dream of owning your own restaurant, café or bar is a big step for many people. In addition to a convincing concept, culinary passion and entrepreneurial skills, a solid contract for the lease of commercial premises forms the backbone of every successful restaurant business. In the hospitality industry, this is typically referred to as a lease agreement, which regulates the use of the premises, including inventory, and often also the right to continue an existing business. But what exactly does such a contract entail, what pitfalls lurk and how, for example, is the termination of such a lease agreement in the catering sector structured?
In the catering industry in particular, the distinction between renting and leasing is fundamental. While a rental agreement primarily regulates the use of premises in return for payment, a lease agreement, especially in the catering industry, goes a decisive step further. The lessee not only receives the right to use the premises, but also to claim the ‘fruits’ generated from them – i.e. the profits of the business – for themselves. This often includes the transfer of inventory, such as kitchen equipment, furniture and sometimes even the customer base or ‘goodwill’ of an established business. The legal basis for this can be found in the Swiss Code of Obligations (CO). A clearly defined contract for the lease of a restaurant is therefore essential in order to precisely define the rights and obligations of both parties – the lessee and the lessor.
A well-drafted lease agreement for a catering property creates transparency and minimises the risk of subsequent disagreements. Pay particular attention to the following clauses:
Leased property: A detailed description of the premises being leased is essential. This includes not only the dining areas, but also the kitchen, storage rooms, sanitary facilities and outdoor areas such as terraces. An accurate inventory list detailing the condition of the equipment and furniture being taken over is equally important. This prevents disagreements when the property is returned or in the event of termination of the contract.
Rent: The rent can be a fixed amount, dependent on turnover or a combination of both. In the case of a turnover-based rent, the basis for calculation and the settlement modalities should be clearly defined. Also check the provisions on ancillary costs and any adjustment clauses for the rent.
Lease term and options: Many lease agreements in the catering sector are concluded for a fixed term of 5 or 10 years. Option rights for an extension are often granted. These give the lessee planning security.
Maintenance obligations: Who is responsible for which repairs and maintenance measures? Usually, the lessee bears the costs for ongoing maintenance and minor repairs, while the lessor is responsible for major repairs and renovations. A clear distinction in the contract is invaluable here.
Inventory: When taking over inventory, its condition must be recorded in detail. Who is liable for wear and tear and defects? Is there an obligation to replace certain equipment after a certain period of time? These points should not be omitted from a comprehensive lease agreement.
Operating obligation: Landlords often have an interest in ensuring that the premises are operated continuously (or seasonally) in order to maintain their value and attractiveness. An operating obligation may therefore be included in the contract.
Non-competition clause: Sometimes a non-competition clause is agreed that prohibits the lessee from operating a similar establishment in the immediate vicinity. Pay attention to the geographical and temporal scope of such a clause.
Deposit: The amount and conditions for the repayment of the lease deposit should be clearly regulated.
Sooner or later, the time may come when a lease agreement is terminated. The terms and conditions for this are subject to specific regulations, which may differ from those for residential tenancy agreements.
Ordinary termination: In the case of open-ended leases or after the expiry of a fixed term, the relationship can be terminated in accordance with the statutory or contractually agreed notice periods and dates. For business premises, the notice period is usually six months, unless otherwise agreed in the contract. In the case of leases, the notice periods are often longer. Notice of termination must be given in writing and received by the other party in due time. It is strongly recommended that this step be taken by registered mail in order to have proof of delivery.
Extraordinary termination: Early termination of the lease agreement is only possible for important reasons. Such reasons may include, for example, the bankruptcy of the lessee, serious breaches of contract by one of the parties or the unusability of the leased property due to unforeseen circumstances. Here too, formal requirements and deadlines must be observed. If the lessee is in arrears with payment, the lessor may terminate the agreement extraordinarily after setting a payment deadline with a warning of termination.
Protection against termination and extension: Similar to tenancy law, tenants of restaurant and commercial properties may, under certain circumstances, apply for an extension of the lease if termination would constitute a hardship for them that is not justified by the interests of the lessor (Art. 272 ff. OR analogously). Such a request must be submitted to the competent arbitration authority within the specified time limit.
Finding a new tenant: If a tenant wishes to be released from a fixed-term contract for their restaurant premises before the end of the term, they may propose a reasonable and solvent new tenant to the lessor who is willing to take over the contract on the same terms. If the lessor rejects such a replacement tenant without good reason, the tenant is released from his obligations.
The drafting and review of a lease agreement for catering businesses and the handling of a termination are complex matters with far-reaching financial and legal consequences. It is therefore strongly advisable to seek legal advice from a solicitor specialising in lease and catering law or an industry association before signing or in the event of an impending termination of the contract. These experts can assess individual risks, point out industry-specific features and ensure that your interests are optimally protected.
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