Example of a relocation clause: “The lessor must give the Lessee at least 3 months notice of relocation” Further if the relocation “cannot be carried out practically without vacant possession of the premises” …”the Lessee must vacate the premises” The tenant’s business’ tenure is effectively 3 months.
The risks to the future profit levels, hence business value and salability, is obvious.
Granted, there are Retail Shop Leases Acts in most States that deal with these clauses and compensation provisions in such leses. But, the ‘power of the parties’ should always be considered in such matters in my view.
Business owners should be well aware of the implications on the value and saleability of their businesses before enter into such lease arrangements.
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