Hi XBenX
In what way does the lease prevent you from sub-letting?
I appreciate that commercial leases are not necessarily subject to retail tenancy legislation (remember, I only have the working knowledge of Victorian legislation, know diddlysquat about NSW or other States) but it is in the pre-printed sections of my commercial leases that the landlord shall not 'unreasonably refuse' to grant requests from the tenant regarding exercising options, assignment and, I presume, sub-letting of the premises.
Sub-letting, of course, can include the use of defined space, not necessarily the whole of the premises subject to the lease.
If the landlord agrees to accept the sub-lessor, this has the same effect on you as if the lease had been assigned: You remain responsible as the original tenant for the execution of the lease.
So unless you want to effectively act as Guarantor for your purchaser's feasance of the lease, don't even think about it!!
If you want to sell the business, sell it and be gone. They can then apply in the usual way for a new lease to be drawn up and you are clear of the deal.
An Agent I worked with for a while wanted to sell her Nursing Home business, and the Landlord would not accept the new tenant as they had no previous business experience. My friend was desperate to be gone, so agreed that if a new lease was drawn up that she would guarantee performance for five years.
For five years she worried and fretted about this, plus of course the guarantee meant she had to declare it on all finance applications, and this severely restricted her for that time. In fact, I think she went to the trouble and expense of gifting her existing properties to her daughter, she was so concerned that the new tenants would cease to pay the lease.
So my suggestion is to make a clean break, but if you want to insert a 'First Refusal' clause in the Contract of Sale of the business, this would require the new owners to give you the option of first refusal should they wish to sell the business within, say, five years of purchase. You will be required to give them a covenant (promise) not to set up in competition with them for (usually) five years and five kilometres. When I sold the child care centre I had to give them five years and 15 kilometres, as promise for the goodwill.
A well known Agent in Melbourne (B.... P....) did almost that with one of his franchise offices. B.... and wife apparently started in this office, sold the franchise and concentrated on franchise operations. The flagship office wallowed in the doldrums to the point that B... bought it back and restored it to it's former glory. It could have been a public relations disaster if the original office had foundered.
So, XBenX, either in or out, no half way measures, or you will find yourself with an albatross around your neck for the next five years
Water, water everywhere and all the boards did shrink
Water, water everywhere and not a drop to drink!
By the way, even though I am sure this is illegal, one local hairdresser told me he handed his landlord $10,000 break fee to agree to start a new lease when he (the hairdresser) decided to shift his business to other premises and advertised for a new tenant who he then introduced to the landlord.
We can legislate all we like but some cultural groups will still do things the 'old way'.
Good luck
Kristine
