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John Yoswick

John YoswickJohn Yoswick is a freelance automotive writer based in Portland, Oregon, who has been writing about the collision industry since 1988. He is the editor of the weekly CRASH Network (for a free 4-week trial subscription, visit www.CrashNetwork.com).


He can be contacted at john@crashnetwork.com 

Tuesday, 06 April 2021 21:52

Deciding Between Leasing and Purchasing When Adding Shop Locations

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John Walcher, top left, of Veritas Advisors moderated a panel discussion on real estate issues related to growing collision repair businesses. John Walcher, top left, of Veritas Advisors moderated a panel discussion on real estate issues related to growing collision repair businesses.

Index

...you’re growing with brownfields and take-overs and will be adding a lot of value to the facilities you take over or that you build, you may want to benefit from the value [in the property] you put in there as the operator.”

 

The terms of any lease can be very important, Johnston said, particularly when you decide to sell your business.

 

“The lease you’re negotiating now might be the lease that you’re assigning over to a buyer of your business later,” he said. “It will affect the valuation [of the business] and certainly will affect the ease of getting that deal done. Typically in an acquisition, it’s the third-party landlords that can potentially really gum things up. Because they’re not the ones about to make a big payday. They may very well see it as their chance to renegotiate items within the lease.”

 

Think carefully even about an arms-length lease you put in place with yourself or an affiliate LLC, Johnston said, because a buyer of your business may look at that lease and “expect those same terms.”

 

Panelist Ben Hidalgo of Net Lease Development agreed, suggesting anyone leasing commercial property to or from others find an attorney who understands leasing for a specific use. A collision repair business that has even just one poorly crafted lease among its two or three or 10 locations can get “held hostage” to that, particularly at the time the owner hopes to sell the business.

 

“Get a good attorney, not just a friend who does it,” Hidalgo said. “Don’t skimp on that. Get an expert in retail leasing, to get a lease that will protect you long-term.”

 

An attorney with sufficient leasing experience will know what’s been problematic for other clients in the past, he said.

 

Dean Fisher, president of Driven Brands’ collision group, which includes CARSTAR and Maaco, also offered his take on the purchase-vs-lease decision during the panel discussion. He said most of his company’s franchisees have...


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