So, you want to buy or sell a micro gym. Congratulations. Regardless of which side of the agreement you are on, you are about to embark on a journey. You are either getting ready to take over a business and fight like hell to keep it going. Or, you are about to walk away with a large sum of money to start a new adventure. We are willing to bet you’ve found a buy/seller, you’ve negotiated a price, and you may have discussed various contingencies. If you’ve really done your homework, you’ve already read our articles on asset purchase agreements. However, if you are like 90% of the buyers/sellers who call Gym Lawyers, you’ve likely overlooked the #1 issue that could kill your finely crafted deal.
It is rare that we help a micro gym owner who owns his/her space. Business consulting companies, like Two Brain Business, have pushed gym owners for years to buy their building. However, until you’ve reached a certain level of capital, you are stuck resorting to a Commercial Lease. And, this is where the problem arises.
People who have never gone through the buying/selling process before often overlook the transfer of the commercial lease. If you were prepared at the time you signed the commercial lease, you signed on behalf of your LLC, not as an individual. Now that you are ready to sell your business, your LLC will no longer be running a business in that building. So, you need to get off of the lease. You may think that is easy. However, it isn’t. You signed a five years lease. It’s only been three years. No landlord is going to agree to let you out of your lease early. This is the issue. If you can’t get out of the lease, and the buying company can’t move into the lease, how are you going to complete the sale of your gym?
The Unwelcomed Third Party
Because of this x-factor, micro gyms buying and selling actually has a third party to the agreement, the commercial landlord. You are one party. The buyer/seller is the second party. The landlord is the third. Without the landlord’s consent, your amazing buying/selling opportunity is dead in the water.
Assignments and Subleases
How do you fix this? Pull out your commercial lease and look for a section called, ”Assignments and Subleases.” If the landlord won’t let you break your lease, this is your only option. Also, your buying/selling just for more complicated.
If you need help navigating this complex process, let us know. We will take a look at that commercial lease for you and let you know what it says. Even better if you can reach out to us before you agree on all of the other buy/sell terms. We saved a gym buyer $250,000.00 once because he brought us in on the deal in time to stop it after we saw the commercial lease.