When exploring this issue, you might try using the "Site Selection Checklist" (on page 7 of WWQ Issue 16) to help judge the suitability of the space to be leased.

Just as there is the possibility of many benefits from an arrangement such as this, so can there be the possibility of any number of deterrents. For example, what will happen if the owner of the music store wants to control your pricing policy? What will happen if he becomes disenchanted with your work and wants you out? What if he decides to relocate unexpectedly? Who decides what hours the shop will be open?

All of these considerations and many more must be decided and agreed upon BEFORE the contract or lease is signed, and most importantly, both parties must understand the limits and responsibilities imposed by the agreement.

Below is a list of 28 considerations or clauses that will probably have to be addressed to one degree or another when setting up a lease agreement of this type. This list of clauses by no means represents ALL the variables that may arise in each and every situation; however, it does give you a place to start. Furthermore, it is not meant to replace the advice and council of a reputable attorney or business counselor. This type of professional assistance is something that you will need for the protection of both you (the lessee) and the landlord (the lessor).

• CLAUSE 1: The location of the premises to be leased is described and the extent of the services and merchandise to be offered for sale is outlined.
  
  

• CLAUSE 2: The basis of the charge to the lessee for the use of the leased space is stated. It describes the cost of the space as it relates to either the percentage of net profit (usually between 10% and 25%) or as it may relate to percentage of sales (less returns, repossessions, occupational taxes, trade allowances, discounts, carrying charges and interest).
  
  

• CLAUSE 3: The lessor shall take charge of all funds, keep accurate records, and provide the lessee with a monthly financial statement on or before the 15th of the month following the period covered by the statement.
  
  

• CLAUSE 4: "Charges" and "’deferred payments" are to be treated the same as cash sales.
  
  

• CLAUSE 5: The lessor may change the location of the service department within the store (as long as the efficiency and effectiveness of the shop is not handicapped unduly) and he is to pay for the costs of any such change.
  
  

• CLAUSE 6: The lessee is to supply the necessary fixtures. The fixtures are to be approved by the lessor as to style, color, design, etc., so that they might harmonize with the rest of the store; and the lessor is to contribute a specified percentage of the cost of any new construction relating to the fixtures and said to be the property of the lessor.
  
  

• CLAUSE 7: Specifies the equipment, tools and machinery (usually the larger, more permanent types) that will be provided by the lessor for unrestricted use in the service area. The lessor will naturally retain ownership and will be responsible for the insurance on these items, however the lessee will be responsible for their upkeep and routine maintenance.
  
  

• CLAUSE 8: The lessor is not liable for damage to the lessee’s property by fire, water, or other casualty or theft.
  
  

• CLAUSE 9: The lease may not be assigned and the leased department cannot be sublet or transferred.
  
  

• CLAUSE 10: If the lessee relocates he may not advertise that his shop was formerly on the premises of the lessor without explicit permission from the lessor.
  
  

• CLAUSE 11: The lessee shall employ his own employees and may pay them their wages, but these employees shall agree to abide by the rules of the lessor. Furthermore, if the lessor finds any employee to be objectionable, he shall be removed.
  
  

• CLAUSE 12: The lessor shall supply light, heat, gas, electricity, cashier service, wrapping service, wrapping materials, sales books, local telephone service, and local pickup and delivery service (if applicable).
  
  

• CLAUSE 13: As far as the clientele are concerned, the service department is to be conducted as an integral part of the business of the lessor. Furthermore, the lessee has no right to incur any dept or liability in the name of the lessor.
  
  

• CLAUSE 14: The lessee is to advertise in the name of the lessor but is to pay for advertising himself. The lessor is to approve all advertising, which should conform to the type and style used by the lessor.
  
  

• CLAUSE 15: In case of a physically damaging tragedy (i.e. Fire or explosion) the lease will terminate if it is impossible to carry on the business as the result of the damage.
  
  

• CLAUSE 16: If either party goes into bankruptcy or makes assignments for the benefit of a creditor, the lease is to terminate.
  
  

• CLAUSE 17: The lessor is to fix the hours that the service area is to be open to the public.
  
  

• CLAUSE 18: Specifies the limits to which the lessor may make adjustments or settle claims involving repair shop customers.
  
  

• CLAUSE 19: The service department shall be conducted in a first class manner and kept adequately stocked with the necessary stock, parts, materials, and supplies at all times.
  
  

• CLAUSE 20: Window space and other appropriate internal display areas are to be made reasonably available for advertising to the lessee at no extra charge.
  
  

• CLAUSE 21: The lessee will indemnify and hold the lessor harmless of any act of commission or omission on the lessee’s part.
  
  

• CLAUSE 22: The lessee must carry adequate workman’s compensation insurance and public liability insurance (i.e. bailey) indemnifying the lessor.
  
  

• CLAUSE 23: Specifies the rate (s) and conditions under which the lessee will provide service to those instruments belonging to the lessor (i.e. trade-ins, rental returns, and general stock instruments).
  
  

• CLAUSE 24: Specifies the discounts for the lessee and lessor’s employees and provides that the lessor shall be paid the lease percentage on these accounts.
  
  

• CLAUSE 25: The lessee shall pay all appropriate taxes arising from the operations of the service department.
  
  

• CLAUSE 26: The lessor agrees not to engage in direct competition against, or participate in the competition for the services and/or merchandise offered by the lessee (as outlined in the agreement clause 1).
  
  

• CLAUSE 27: The lessor will deduct and retain carrying charges on time payment accounts.
  
  

• CLAUSE 28: The lessee shall repurchase goods and/or services sold by him and subsequently repossessed, and further provides for determining the balance due the lessee and lessor when repossessed goods and/or services include goods and/or services purchased from both parties.