Consider: You found the perfect plaza to open your dental practice. On move-in day, you find out the vacant space next to yours has been leased. Turns out, it’s a competing dental practice. The practice puts large banners in the windows, directs traffic towards its space and offers specials for new customers. Where does that leave you and your dental practice? If your lease doesn’t contain an exclusivity clause, you’re out of luck.
Before you sign a lease for your dental practice, try to negotiate an “exclusivity” clause. An exclusivity clause is a provision in your dental lease agreement that can prevent competitors from leasing space in the same complex. Without one, a competing dental practice could run right next to yours, potentially taking away current clients and redirecting potential new clients to itself. An exclusivity clause typically works together with a “use” clause, which you can find more about by clicking here.
You’ll find that many leases do not include exclusivity clauses. That is because landlords typically only agree to let powerful tenants negotiate an exclusivity clause. If such is the case, don’t give up! You may still have the option to propose a more specific, less restrictive exclusivity clause. For example, instead of asking for an exclusivity clause that restricts all other dentists from leasing space, try to negotiate for an exclusivity clause that restricts only a competing specialty.
In addition to ensuring that an exclusivity clause is contained in your dental lease, your lease should impose severe consequences on your landlord if they breach the exclusivity clause. Most likely, allowing you to terminate your lease and vacate the premises won’t be the ideal option, as doing so can cause you to have to put your business on hold and incur significant unexpected expenses. For example, you may have to undertake market research for a new location or pay increased rent. To better protect yourself as a tenant, ensure that if your landlord breaches the exclusivity clause in your lease, you will receive a significant reduction in base rent, among other things.
Article prepared by: Amanda Howard
