Negotiate to
Win/Win
Negotiation Isn’t Confrontation
Negotiation is about gaining
something, possibly an advantage
and giving something in return, but
unlike confrontation, the successful
negotiator never walks away
empty handed.
Negotiation is Reaching an
Agreement
Reaching an agreement
means you get some or all of
what you want and the other
party gets something in
return.
In real negotiation, both
sides feel that they are
gaining something which
is the basis for both parties
to agree. This is called
Win/Win.
Everything is Negotiable!
Develop a mind set that that believes
that everything is negotiable, that you
can engage others in negotiation and
that you will look past all of the signs
that suggest otherwise such as price
tags, policy statements, disclaimers
and yes, commercial leases.
Five Keys To Successful Negotiating:
Key #1
 Look
Beyond the Rules We Have Been
Taught to Accept Often Without
Question
 Question any odd, unreasonable or
unfair policy
 Seek solutions that meet your objectives
and the objectives of the policy/rule
Five Keys To Successful Negotiating:
Key #2
 Go
Straight To The Top
 You
won’t get anywhere if you are talking
to the wrong person
 You
 Say:
have to figure out who the decider is
I’ve gotten great service here. Who
can I contact to tell them about it – That
should open the door to the person who
can make a decision
Five Keys To Successful Negotiating:
Key #3
 Don’t
Get Angry – The First One To Get Mad Loses
 Always
avoid confrontation
 You
won’t get very far if the decision maker has
to manage two problems – the negotiation and
your behavior
 Avoid
putting the decision maker in the position
of feeling that they are not-going-to-take-thatfrom-you mentality
Five Keys To Successful Negotiating:
Key #4
Never
Negotiate in a Crowd
Most negotiations should be ono-onone affairs
Successful negotiation means
someone is going to make a
concession which no one like to do
publicly
Five Keys To Successful Negotiating:
Key #5

Give In Order To Get

Give away something or lesser value to you but
of greater real or imagined value to the other
party

Sometimes giving something intangible like
recognition or praise to get something tangible
work

Other times give something tangible the other
party will value but that you can do without
Think Solutions
 Start
by looking for the things, tangible or
intangible the other party wants, needs or
might value
 Identify
the likely problem or barriers to a
successful negotiation
 Think
of the solutions – be a problem solver
– be creative but not too creative
Commercial Lease Negotiations
In Washington there is no applicable
landlord tenant law that sets out
what is fair or unfair or what is
required in a commercial lease. The
law is what the lease says in writing
when both parties sign it
Commercial Lease Negotiations
That means that everything in a
commercial lease really is
negotiable – even though a
landlord or property manager may
imply or state that it is not
Your Business Plan is the place to
start–can you afford the lease?
MARGIN MANAGEMENT
Good
Bad
COGS
25%
50%
Payroll
10%
30%
Lease
10%
15%
Other
10%
15%
55%
110%
45%
-10
Total
Left for you or debt :
WHY KNOWLEDGE OF LEASING IS
IMPORTANT TO BUSINESS OWNERS
ON THE TOPIC OF ATTORNEYS

Attorneys practice law. They are typically not trained
in business skills.

Business Owners practice a separate set of business
skills and are typically not trained in the law.

In the end the business owner has to determine what
is the right course for his/her business.

An attorney does not sign a contract. Only the
business owner does.
What is the role of the real estate
broker?
Real estate brokers are very highly
trained sales people whose primary job is
to locate qualified tenants and get them
emotionally involved with the space
being offered. This puts most small
business owners at a disadvantage
What are the elements of the Letter
of Intent?










TENANT & PREMISES
DISCLOSURE OF FINANCIALS AND BP
USE OF THE PREMISES
LEASE & RENT COMMENCEMENT
RENT - OPTIONS TO RENEW
DEPOSITS
ADDITIONAL RENT
LANDLORD’S & TENANT’S WORK/HVAC
TERMINATION RIGHTS/GUARANTEE
PARKING/SIGNAGE, ETC
What are the areas of
common dispute between a
Landlord and a Tenant after
the lease is signed?
 HVAC
MAINTENANCE, REPAIR & REPLACEMENT
AND TEMPERATURE CONTROL
 PARKING
 AND
FOR STAFF AND GUESTS
- MONEY
What is worth negotiating in a
commercial lease?
RENT
 OPTIONS
 LANDLORDS WORK
 TENANTS WORK
 TI ALLOWANCE
 LENGTH OF TERM
 LENGTH OF PERSONAL GUARANTEE (TIME)
 AND………..

What are the important language
elements in a lease?
 What
legal entities is the lease between?
 Is there full or modified NNN?
 How much money will be due at lease signing?
 What are the various dates involved: Lease
commencement, possession, rent start, termination,
window to renew?
 What is the allowable use?
 Alterations, Repairs, Signage, Assignment?
 What are the insurance requirements?
What is a personal guarantee and
does the tenant have to sign it?

IT DEPENDS ON WHO THE PARTIES THE LEASE IS WRITTEN
BETWEEN ARE

IT CAN BE NEGOTIABLE IF THE TENANT IS AN ESTABLISHED
CORPORATION OR LONGSTANDING COMMUNITY BUSINESS

THE LENGTH OF TIME OF A PERSONAL GUARANTEE CAN
SOMETIMES BE NEGOTIATED IF ALL OTHER FACTORS ARE
STRONG
What happens if I default on any of
the terms of the lease?
 Typically
when the default happens the Landlord
has the choice to file a lawsuit. If he does he will
engage an attorney who goes to the court to file
the suit. The attorney will hire a process server who
will have the defendant(s) served in person. The
defendant will have 20 days to hire an attorney
and file a response with the court.
 And…………
Q&A
Steve Burke
Washington SBDC – Seattle/Tukwila
[email protected]
206-246-4445