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Negotiating, and Then Enforcing, Exclusivity Provisions in Your Georgia Commercial Lease

Poole Huffman, LLC

One of the types of provisions that you might negotiate to include in your commercial lease is an exclusivity term. Many commercial leases contain exclusive use clauses, particularly in situations in which the space is located in a larger shopping center that contains numerous tenants. What an exclusive use provision does for you, as a tenant, is allow you to use your leased space to operate your specific type of business (such as a clothing store, grocery store, electronics store, or restaurant) and to restrict or bar other tenants from operating a similar or identical type of business in that same shopping center.

Obtaining these provisions, and then making sure that they are enforced, can be vital for your business. The chances are that the calculations you made regarding whether or not a particular space’s lease terms made business sense for you included assumptions that you would have a certain zone where you were free from direct competition. If you end up facing competition within that zone, you aren’t getting the benefit of the bargain for which you negotiated. Effectively negotiating lease terms, and then aggressively working to enforce those terms, are areas where it pays to have experienced Georgia business counsel.

As an example, consider the federal litigation undertaken recently by a Florida-based supermarket that has several locations here in Georgia. The supermarket had negotiated and signed certain leases in Florida that included exclusivity provisions regarding groceries and pharmacies. The problem came after certain other stores, including a “closeout” retailer and a dollar store, opened locations in the same shopping centers and began selling food. This, according to the supermarket, was a violation of the exclusivity clause.

Aggressively enforcing these clauses can be essential to your business’ financial health. If a dollar store or a discount store cuts into your “bottom line” by selling food, it may reduce your profits and make the lease no longer economically feasible. When that happens, it is important to use the litigation process. However, there may be various ways to enforce your rights. One might think that a business in a position like the Florida supermarket would have a cause of action against its landlord. This supermarket, however, sued the competing stores. The supermarket argued successfully that the exclusivity provisions were restrictive covenants and that the competing stores broke those covenants when they entered the shopping center and began selling groceries.

Here in Georgia, there is a specific statute related to covenants restricting land. One important element worth noting about Georgia’s statute is that the law gives you exactly two years after “the right of action accrues” to sue for a breach. That means that you only have a limited time to enforce your rights, so you should take action right away if you think someone is in violation of your lease.

Whether you are preparing to negotiate a commercial lease or litigate to enforce the terms of the lease you already executed, consult the experienced Atlanta business litigation attorneys at Poole Huffman, LLC. Our attorneys have spent many years working to protect and enhance our clients’ business interests through a variety of effective legal techniques. Contact our attorneys online or by calling 404-373-4008 to schedule your confidential consultation.

More blog posts:

How Procedural Errors Can Derail Your Judgment Collection Activity in Georgia, Atlanta Business Litigation Attorneys Blog, July 12, 2018

Georgia Court Allows Judgment Creditor to Pursue an LLC’s Managing Member for Preferential Payment, Atlanta Business Litigation Attorneys Blog, Dec. 15, 2017

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