NNN Burger King issues: attorney ref needed

1 Reply

Mother in law has NNN Burger King in CA... tenant has been very problematic repeatedly. (Late in rent payments multi times and not paying late fees, Incomplete tax payments...)

Need good attorney to help w enforcing lease issues and what happens presuming tenant doesn't renew or MIL doesn't want this tenant anymore... not sure if these national chains find other franchisees to take over or?

Any refs or suggestions or help would be superb

Thanks in advance.

Hi Aaron,

What is in the current primary term lease and any amendments? Is there a personal guarantee or a corporate guarantee? Does the guarantee burn off at some point naturally in the primary term of the lease or is there an early termination clause if certain sales numbers are not met?

Is the current rent the Burger King paying above, at, or below market rents for single tenant retail for that box size in the market? This is important to assess re-leasing capability and desirablility factor of the location.

Do they have to disclose personal and business financials per the lease so you can review rent to sales ratio and EBITDAR for health of the business? 

If corporate guarantee is it the parent company, subsidiary, or a single location entity LLC the tenant created that they can bankrupt and easily walk away from without affecting other stores they own or their personal assets. If personal guarantee it's key to look at financials. If most of net worth is illiquid and or tied up into usually protected retirement type accounts then getting access to the money even with a judgment award will be difficult. Many landlords in these cases if the business is really struggling and wants to shut down get a termination fee from the tenant to try and offset legal costs, loss of rent until new tenant comes in, tenant improvement payments to new tenants, any leasing broker commissions, etc.

Sometimes there is language where if a franchisee defaults the corporate parent company has the right to place a new franchisee into the space and they take over until the transition happens. Default remedies you would have to look at your lease.

It's all about what is in the lease.

Good luck. No legal advice given.