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Get your legals, RIGHT!

The problem with most business owners is that they only choose to seek legal assistance when the are in trouble.

And that is the wrong approach, for a couple of reasons:

  1. Approaching a lawyer when only in trouble will most probably increase your costs, more than usual.
  2. Your case will not only be more complex, it might also take longer

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Commercial Leases 

If you own a business, chances are you may need to consider entering into a commercial lease. So how do these differ from ordinary, residential leases?

There are a number of things you need to look out for. This article will cover the four most important things to look out for before signing the dotted line.

1 . Terms of the Lease and Options

The term of the lease is extremely important for business tenants. There often exists a conflict of interest between landlords and tenants with regard to the terms of leases so it is important to be informed and look out for your best interests.

Generally, landlords prefer the security of a longer term lease (for example, 5 or 10 years), whereas tenants usually prefer the flexibility afforded by a shorter lease (3 years is about standard). This is especially the case for start-up business tenants who commonly either go out of business or rapidly expand and require a new lease to expand operations in the near future. Keep in mind that, as mentioned, if the relevant retail lease legislation applies to your lease, there may be restrictions upon the minimum term of your lease.

Another important consideration is whether the lease provides you with an option to renew at the end of the initial term so you have the option to continue trading. This is very important for commercial leases as a large proportion of your businesses’ goodwill may be attached to your premises, so you may want to protect this.

2. Rent and Security

The rent clause is probably the most obviously important aspect of any lease agreement. When it comes to paying out expenses, we all want to keep it to a minimum! The rent clause specifies the the amount of money the tenant must pay to the landlord in return for the landlord providing the use and occupation of the property. Rent is a significant operating expense for most businesses.

The rent for the initial term, as well as any changes to the rent, must be specified in the lease. The most common methods of rent review (i.e. changes in rent) are consumer price index (CPI), fixed percentage increase and market rent. It is important to ensure you will be able to afford any proposed rent increases during the period of your lease and any renewal period to avoid falling behind.

The landlord may also request a security payment from the tenant to protect against the tenant failing to pay rent (i.e. defaulting). This would either be in the form of a bank guarantee by an individual tenant, or a personal guarantee by a company tenant’s directors. The security deposit can be a significant amount of money, usually equal to three to six months’ rent. Therefore, you shouldn’t forget this cost when assessing the affordability of your commercial lease.

3. Termination

Lastly, you should also review the termination clause contained in your commercial lease. Keep an eye out for any clause which allows the landlord to terminate the lease before the end of the term. In most cases, it is highly advised that you seek to have this removed as it causes uncertainty of your lease which can be very damaging for your business. Further, you should be aware of any other circumstances which will cause your lease to be terminated.

Get Advice from a Professional

There are clearly some very important things to look out for when entering a commercial lease for your business.

Each of these factors has the potential to have a major impact on the performance of your business, so it is worth looking into obtaining independent legal advice to protect your best interests. As a potential tenant, if you are unhappy with any aspect of your lease agreement, you should negotiate with your landlord to reach an agreement that suits your needs.

Advertising & Promoting your online Biz – the LEGALS

When advertising and promoting your online business, you should bear in mind that there are legal ramifications of your actions.

By being mindful of the following few common advertising and promoting mistakes, you can make sure that you stay on the right side of the law!

Making misleading and false claims

When marketing your online business and designing your website, you need to ensure that you do not make any claims about your product or service which may mislead clients or create false impressions.

 Below, you will find a list of some common types of false and misleading advertisements that you may unintentionally create.

·      Fine print: while many advertisements do include fine print, the words in the fine print must not contradict the overall message of the advertisement.

·      Comparative advertising: many advertisements compare their product or service to others on the market. This comparison must be accurate, otherwise the advertisement could be considered misleading.

·      Bait advertising: this occurs when you advertise something to be on sale when there is either no, or very little stock available. To avoid being misleading, the advertisement should state that there is a short supply of the good in question.

·      Environmental claims: if you advertise that your product or service is environmentally friendly, you must be able to substantiate this claim.

You can still use very exaggerated phrases, which are referred to as “puffery” These are the types of phrases that no one could treat seriously or find misleading. 

Using Social Media

Using social media is a fantastic way to advertise and promote your business directly to prospective clients. It is your responsibility to ensure that any content published on your social media page is accurate, irrespective of whether you were the author of it. The best way to minimize the risk of using social media to advertise and promote is to avoid making any statement online, that you would not make in any of your other advertisements (such as in print).

You should prohibit others from commenting on your page with misleading claims.

You have the power to remove and reply to comments on your social media pages and should do so if someone is posting misleading statements.

You should bear in mind that social media is a 24/7 operation and that it is your responsibility to monitor your pages.

Spamming

A good way of advertising and promoting a new online business is by sending ‘cold’ messages to potential clients.  You do need to be careful that these messages are not considered spam.

Spamming occurs when you send people spontaneous messages without their consent. . You should only email potential clients who have expressly or implicitly given consent to be contacted. If the client’s email address or contact details are publicly available online and there is no attached statement that commercial messages are not wanted, then this is a form of inferred consent. You should also bear in mind that the subject matter of the message you are sending needs to be relevant to their business

Need more assistance on HOW TO ENSURE THAT YOUR ADVERTISING IS LEGALLY COMPLIANT?

Drop us a mail  at info@lenoma.co.za or visit us on http://www.lenoma.co.za to see how we can help you.