- Keep your documentation – make sure all your key lease documentation is kept safe and is easily accessible; it is likely to be crucial if a dispute arises
- Know what you're getting into – make sure you understand the limitations of your lease
- Be optimistic and patient – you need to stay positive during lease negotiations and try to come to a mutually beneficial agreement with all parties
The business: Cup of Truth
After more than a decade working in the hospitality industry, Courtney Joel Patterson and Jonathan Freeman joined forces in 2009 to open their own little hole in the wall cafe: Cup of Truth, in the bowels of Melbourne's iconic Flinders Street Station.
The shop's unusual location was a key point of attraction for Courtney and John, but it has presented challenges in managing their retail lease. "We loved the space as soon as we saw it. We knew no one else had anything like it in Melbourne. The challenge for us was how to make the space work for what we had in mind," says Courtney.
The challenges: Common pitfalls in retail leases
Cup of Truth's biggest challenge came during set-up, when Courtney and John tried to obtain a food permit for the underground location. It took a solid year of negotiations and almost $8,000 in property amendments before they were able to serve their first coffee.
They were not, however, awarded a permit to prepare food onsite. 'That was an unexpected blow' says Courtney 'Being able to make food on the premises would have added another dimension to the business and would probably have brought more customers.'
The nature of the business lease compounded the challenges. 'We're sublet here, which means that the Council doesn’t see me as the person on the paper,' Courtney says. Communicating with the landlord to resolve issues was often very slow and difficult, as communication went back and forth between the landlord, their tenant and an agent.
The solution: Keeping a good relationship with your landlord
Courtney and John have learnt some key lessons in their journey to open Cup of Truth. Most importantly, they have learnt that problem-solving with your landlord is as much about managing relationships as it is about solving the actual issue. They have worked very hard to establish and maintain a great relationship with their landlord, the City of Melbourne. For example, Courtney took part in Melbourne's Metro Trains This is Me campaign, featuring everyday Australians who use the public transport system. They have also learnt that a direct approach to their agent about any problems is not only more time-efficient, but more effective in resolving any concerns.
Keep these in mind when dealing with your landlord
While the inability to prepare food onsite was an initial blow to their business plan, Courtney and John knew the importance of being flexible. 'We had an idea in mind, and while it didn't work out we weren't going to let that stop us from opening this space.'
Rather than trying to get out of the lease, the boys decided to cater food into the cafe, and Cup of Truth now sells a selection of baked goods including cupcakes, biscuits and slices.
Communicating with your landlord and resolving issues takes time.
'Remember, yours is not the only property they look after,' says Courtney. 'You need to be patient about responses and make sure you allow for that extra time in your business set-up.'
Given the nature of their lease, Courtney and John have had to be very proactive in their communication.
'In the beginning, if a problem arose we were more reactive; asking "why is that happening to us?"' says Courtney. 'Now if we have any problems we're sending an email or a letter to them straight away. We’re very proactive.'
The resultThree years later, with up to 4,000 public transport commuters passing by each day, Cup of Truth serves specialty coffee and cakes to up to 450 Melbourne city workers.
They have been ranked in the top 20 coffee shops in Melbourne.