[Biz Talk] Gross receipts you pay for your rent?

Hello Orchidians,

I’m just now moving my retail jewelry store from a small outbuilding
on our country property to a “real” retail space in the heart of
downtown. The landlord is offering to be “flexible” so I’m hoping to
make him a fair offer that’s really good for me too. He responded to
a request I made for a building owner that would offer creative
terms, so he is prepared for a creative deal. I’ve already said yes
to the retail space and it’s a go, but I still need to make an offer
so we can hammer out the numbers. Other folks I’ve talked to have
suggested paying him a percentage of my gross receipts for the month
up to a certain cap. Does any jeweler, or even a gallery, here have
a similar arrangement? If so, I’m interested in what percentage of
your gross receipts you pay for your rent. I heard of a gallery
that paid their rent this way, but I can’t remember who they were or
where I read about them. Anyway, I’d appreciate your thoughts if you
have such an arrangement with your landlord. Thanks a million!

Cynthia Clinton
Clintonia Couture Jewelry

Cynthia, It’s my opinion that you might as well be in a mall if you
are going to give the landlord a piece of your gross, but in a mall
they actually pay for things like advertising as part of the deal.
There are a host of problems that could crop up with a deal like
this: percentage of what sales?–what happens if you take in
consignment or are forced to sell something for an extremely low
markup? What happens if the landlord decides you aren’t selling
enough to cover his piece of the rent and throws you out? You’ve set
up a storefront and you lose most of your investment because of
this. I can tell you from experience (having been a landlord briefly
as well) that there is no creative element of being a landlord, and
that the best landlord to have is one who has the absolute least to
do with your business. Ultimately setting up anything that is vague
or iffy will be a negative situation in the long run. My best
advice: Have the landlord set a rental figure. Sign a lease and pay
it. Period. When it comes to property it all comes down to money,
and anything that isn’t in writing will end up costing the lessee
(you), not the lessor. Incidentally it is not up to you to set the
rental figures–it’s up to the landlord. If you then want to
negotiate that figure you can try.

Daniel R. Spirer, GG
Spirer Somes Jewelers
1794 Massachusetts Ave
Cambridge, MA 02140

Cynthia. Keep it simple. Your rent should be a fixed amount paid
monthly. A sympathetic landlord might offer you a lower initial
rent to help get you on your feet. He or she might also be willing
to make some improvements and repairs to the property as part of the
deal. Work out a business plan, figure out what you can afford for
rent, and work around that figure. If you can’t afford the space,
don’t get creative, instead, look for a space you can afford.
Anthony Toepfer, Anthony Toepfer Jewelers, Keene, NH