26 Degrees in the Shade . . .

Why Buy a Lease On a Bar?

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Many people don’t fully understand what a commercial lease is, so I often get asked the following question :

Why Lease A Bar When You Can Just Rent One?

The bars that are available for rent are usually:

• Closed for trading
• Not taking any money
• Or the rent is VERY high

A rental agreement lasts usually for one year and then you have to renegotiate the rent. Here are just a few problems that can occur:

• Quite often if you’ve done well the owner will take the bar back at the end of your contract.
• He/she may ask for a big increase in your monthly rental.
• He/she may sell the business at a good price because you have built up the trade.

When you lease a bar, you are buying:

• The customers
• The fixtures and fittings, machines etc
• The right to continue trading in the bar for 5-10 years and even after that you can, if you have the specific clause within your contract, renew for an extra 5-year period
• Rent increases are mostly in line with the Standard Inflation Index (IBOR) and at the end of the lease there will be an increase of typically 10-15%
• If you do well and build the business up, you can sell the lease at a profit

IMHO renting is a mug’s game.

This entry was posted on Sunday, April 13th, 2008 at 6:52 pm and is filed under Business. Find similar posts by selecting and of the following tags: leasing, renting. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.