Bernard is a shopkeeper who wants to give up his business. He heard about lease management as an alternative to his reduced income. In Sylvain, he has even found a buyer for his business. Stéphanie Swiklinski, a qualified notary, answers their questions.
Bernard:
What is a management lease?
Stéphanie Swiklinski: A business lease allows the owner of a business (the lessor) to grant a person (the lessee-manager) the right to run the business on a temporary basis. In a way, this involves "renting out" the business, in return for payment of a "rent" called a royalty. In order to facilitate access to management leases, the law of July 19, 2019 simplifying, clarifying and updating company law abolished the requirement of a minimum of two years' operation before a management lease can be granted. Bernard, who has been running his business for many years, will have no difficulty in signing this type of contract with Sylvain.
Sylvain:
What are the advantages of lease management for me?
Stéphanie Swiklinski: In reality, lease management is often accompanied by a unilateral promise to sell. It allows the tenant-manager to test the business, before moving on to the next stage: acquiring the business. A management lease can also be signed for one year, renewable by tacit agreement. It should be noted that a management lease is less binding and more flexible than a commercial lease. After a few years of operation, Sylvain will be able to take advantage of this type of contract, the duration of which will be determined in advance.After a few years of operation, Sylvain will be able to demonstrate his credibility to financial institutions, and thus gain easier access to loans. From the owner's point of view, leasing the business is above all a way of preparing for the transfer of the business and securing additional income when the time comes to retire.
Bernard:
How can I set the amount of the lease fee?
Stéphanie Swiklinski: The amount of the rent, known as the "redevance" under a management lease, can be freely agreed between Bernard and Sylvain, and is subject to review. The form of the royalty is variable, and can be either :
- a fixed sum,
- a percentage of profits,
- a percentage of sales,
- a percentage of both profits and sales.
Royalty payments are made monthly or quarterly, according to the terms of the contract.
Stéphanie SWIKLINSKI