The coronavirus pandemic has upset nearly every aspect of the way the world does business. Most non-essential businesses in the Philadelphia area have started to operate remotely since the pandemic hit. Non-essential employees have been telecommuting from home. Many retail companies have shifted to delivery only.

Depending on the severity of local COVID-19 outbreaks, some non-essential businesses have even had to shut down completely under county or township law.

What do you do when you’re tied to a commercial lease for space you can no longer use? Many businesses have had to cut costs as revenue has fallen. A high rent payment on your balance sheet now could jeopardize your company’s survival.

Business owners facing these types of drastic changes are justified in wanting out of their commercial leases. Can you get out of your lease because of the pandemic?

The answer is: possibly. Most commercial leases require that you pay a penalty fee for early termination. But landlords haven’t been immune to the effects of the pandemic. If your commercial landlord faces a high number of vacancies with a low chance of finding new tenants anytime soon, they may be more willing to negotiate better lease terms for you.

Every commercial lease is unique. The only way to know your options is to go over the actual terms of your lease – preferably with the help of an experienced local business lawyer. Holmes Business Law Firm is dedicated to getting the best terms possible for our clients. Call the Philadelphia offices of Sarah Holmes today for a consultation at 215-482-0285.

Important Terms for Terminating Your Commercial LeaseWhen reviewing your commercial lease, look carefully at any language discussing how your lease could end. Clauses to look for include:

• Lease Term – How long do you have left on your commercial lease? Your approach may differ if you have only a few months remaining versus a year or more.
  
  
• Early Termination – Your lease may actually include a clause outlining terms for early termination. If so, you must follow the procedures laid out as closely as possible. When do you need to send your notice of termination? Who do you need to send it to? Can you communicate your notice by email or does it have to be mailed to a specific address? If you don’t follow the proper method, your landlord may refuse early termination.
  
  
• Security Deposit – How much did you put on deposit? Normally, if you break your lease before it ends, you lose your security deposit. In some cases, your landlord may agree to offset the cost of your rent with your security deposit.
  
  
• Continuous Operation or Abandonment Clauses – Commercial landlords want their tenants’ businesses to stay open, especially in large shopping centers. As a result, many commercial leases require minimum hours of operation. If you’re unable to meet those hourly requirements for a certain period of time, your landlord may declare a default and take over your lease. Because of COVID-19, you may not be able to meet the minimum hourly requirements outlined in your lease. That may affect your negotiations.
  
  
• Landlord Services and Amenities – Lease agreements go both ways. Landlords have obligations just like tenants do. Your commercial landlord may be responsible for cleaning, maintenance, air conditioning, security, parking, or common areas. If your landlord is unable to provide these services during the pandemic, you could request a rent reduction or abatement. You could also negotiate lower common area maintenance (CAM) charges each month based on saved costs.
  
  
• Force Majeure Clause – Many contracts, including commercial leases, have force majeure clauses. A force majeure clause can excuse you from your lease based on major circumstances that are out of the control of either you or your landlord, such as natural disasters. For more information on how force majeure can affect your business in the time of coronavirus, check out the next blog post in this series.
  
  
• Commercial Frustration – Your lease may include a statement of purpose or the purpose may be implied. If government action in response to the coronavirus makes it impossible for you to fulfill the purpose of your contract, you could argue commercial frustration. This argument would be the most successful for businesses unable to operate at all versus those operating at partial capacity (e.g., beauty salons or gyms versus restaurants with outdoor dining options).
  
  
• Personal Rent Guarantee – Many commercial leases include a rent guarantee provision that requires the business owner to personally pay the rent if the business does not. This could make you vulnerable to personal liability.
  
  
• Landlord’s Lien – In some cases, your landlord may hold a “lien” or security interest in your physical business items located at the property. That could cover office chairs and desks, computer equipment, or even your own products stocked at your location. Your landlord could take these items as collateral if you break your lease.
  
  
• Subleasing – If you’re unable to get out of your lease, you may be able to sublease it to a subtenant. You may or may not need your landlord’s consent to sublease. Even if you’re unable to find a subtenant to pay full rent, you could offset some of the cost.
  
  
• Waivers and Amendments – Your commercial lease will normally have terms for managing waivers and amendments. Most leases require waivers and amendments to be in writing. Lease amendments often need both the landlord and tenant to sign.

Negotiating a Commercial Lease Termination with Your Landlord

Your commercial landlord may be sophisticated and experienced, with many properties and lease agreements. They may be represented by professional property management companies. When approaching your landlord about terminating your commercial lease early, you must be prepared to back up your request with financial documentation and proof of hardship.

At the same time, you have to consider that your commercial landlord may not necessarily have deep pockets. They also have bills like payroll, utilities, and taxes. Their property may get foreclosed if they fail to make their mortgage payments on time.

As a result, a commercial lease early termination can be a delicate negotiation. Even if you've had a good relationship with your landlord in the past, you don't want to ruin it now.

To get the best results for your business, you should evaluate where you stand legally and financially with an experienced business lawyer. Consider:

• Are you currently in breach of your lease?
• Are you able to continue business operations on-site in any capacity?
• Can you defer rent payments until your business starts back up?
• Can you afford to pay rent at a decreased rate?
• Does your landlord have a security interest in any of your business property?
• Would you be personally liable for rent if your business doesn’t pay?
• Do you or your landlord have insurance that covers business interruptions?
• Are there any government relief or aid programs available to you?
• What is your business plan moving forward?
• Considering your situation, is lease termination the best option?​​

At Holmes Business Law, we help you set your financial goals before going into the negotiation with your landlord. We provide creative solutions for you to navigate the shifting COVID-19 landscape based on the needs of your business now and in the long-term.

Call our Philadelphia area law offices now at 215-482-0285 for a consultation with an experienced lawyer dedicated to helping your business thrive.

In this new video, Managing Attorney Sarah Holmes discusses what to consider when planning for your business in 2021. 

Given the difficulties experienced by business owners in 2020, it can sometimes be hard to see how to plan for another year of potential uncertainty.

Learn how to spot opportunities arising over the next year and put together a plan for success.

In March 2020, the event ticketing website StubHub faced a tide of cancellations and schedule changes as the coronavirus spread across the United States.
In response, the company offered customers a choice: either receive a full refund or get company credit for 120% of the original ticket price. The opt-in was a success, with many customers choosing to get company credit over a refund.

Several days later, StubHub changed the terms of their policy. Instead of offering their customers refunds as an option, everyone would get the 120% company credit.
The first lawsuit was filed within a week, asking upwards of $5 million in refunds for all of the customers who were affected by the policy change.

It’s a business owner’s nightmare come to life.

If you haven't taken a look at your cancellation and rescheduling policies since the pandemic, the sooner you review them with a local business lawyer, the better. If you’ve never considered these policies at all before, you’ll want to do so now. A misstep in this shifting economy could prove costly to your business, your brand, and your professional reputation.

Cancellation and refund policies apply to more than just event-based companies. You may have to cancel orders or shipments based on global supply-chain disruptions. Your employees may be unable to reach originally promised project deadlines because of reduced staff hours. You may be a service provider who’s unable to see clients under local COVID-19 laws.

Even with all the uncertainty in the world, it's clear that the coronavirus is here to stay. As we round out the sixth month of the pandemic, the ride has been bumpy, chaotic, and unpredictable. The right legal precautions can help make the next six months smoother and set up your business for long-term success in a post-COVID world.

What to Consider in Cancellation & Rescheduling PoliciesWhen considering your cancellation and rescheduling policies, the first thing you should do is review your current contract. Your policies should be clearly stated with time limits.

What if you don’t have a contract or your contract doesn’t contain a cancellation or rescheduling policy? You can look at your industry’s commonly-accepted standards for a place to get started.

Your policy should answer the following four questions:

1. Is your retainer or deposit refundable?
2. What are your deadlines for canceling and rescheduling?
3. How many times can your customers reschedule without a fee?
4. Is there a potential increase in price for prime dates in the future?​

Now, consider whether you need to make changes because of the impact of the coronavirus. Would you like to extend your cancellation and rescheduling deadlines to offer a greater grace period for your customers? For example, a local gym that’s shut down under a local ordinance may want to extend their customers’ class passes until they can actually use them in person.

It's important to make these decisions thoughtfully, with long-term effects in mind. You have to balance customer expectations with your bottom line. Giving all your customers immediate refunds may leave your business cash-strapped or even bankrupt. But walking back on your policies may land you in the same legal trouble as StubHub.

Right now, brand trust and loyalty are more important than ever. Your dedicated customers could determine whether or not your business survives these turbulent times. The last thing you want to do is alienate them with poor business policies.
What About Force Majeure Contract Clauses?Your contract may already set out procedures in place for situations that are unforeseeable, unpredictable, and impossible. Many contracts include force majeure clauses that allow cancellation for “acts of God” beyond the control of the parties.

We’ll go deeper into force majeure clauses in a later blog post. But just because you have a force majeure clause doesn’t mean it automatically applies to the coronavirus. That ultimately depends on how the force majeure clause is written in your contract.

Generally, the more specific your force majeure clause, the more narrowly it gets interpreted. For example, your force majeure clause might cover specific types of disasters but fail to mention pandemics. That could leave you on the hook for fulfilling your contract even with the difficulties wrought by COVID-19. The only way to truly determine how your force majeure clause applies to you is to discuss it with an experienced local business lawyer.

Get Local Legal Help With a Philadelphia Business Lawyer
When considering COVID-19 policies for your business, it's important to consult with a local lawyer about your options. The pandemic response has varied by location, which means the laws in your locality could affect the rules by which your business operates. Your options may vary if your business is located in New Jersey compared to Philadelphia or other Pennsylvania counties like Bucks, Montgomery, Delaware, or Chester County.

Every case is fact-specific. Your cancellation and rescheduling policies may look different than businesses in other industries. In addition, your business has unique needs and operational challenges. Your customers have particular expectations. Working with a lawyer allows you to create policies tailor-made for your business, with your customers in mind.

At the Holmes Business Law Firm, our talented legal team will work with you to create a cancellation and rescheduling strategy that:

• Protects your business and brand reputation,
• Takes care of your customers and surpasses their expectations, and
• Prepares your business for long-term success even in the pandemic.

In addition to differences in the law based on where you’re located, COVID-19 business requirements can change drastically on a day-by-day basis. These changes continue to be out of your control, based on coronavirus statistics in your area. When creating cancellation and rescheduling policies for your business, our lawyers consider not just what makes sense to your business right now, but what will continue to serve you even in times of future uncertainty.

Call the Philadelphia offices of the Holmes Business Law Firm today at 215-482-0285 for a consultation with an experienced local business lawyer.

Emergency situations tend to bring out fight or flight behaviors.  For business owners, covid-19 has certainly made many decide whether to fight or flee.

The economic toll of covid-19 and the lockdowns and business restrictions are going to have severe effects on business owners for years to come. Unfortunately, we hear from business owners every day about the devastation to their business, whether it's a default on their commercial lease, whether they can invoke force majeure in their contracts, or having to lay off staff.

However, every negative has a corresponding positive and sometimes it really is a mindset that makes the difference. We've been inspired by the number of current and potential business owners who see the current situation as an opportunity.

This includes purchasing a business.  We've closed a number of business purchases for clients since the start of the pandemic.  In fact, we've gotten a record number of calls for help with business purchases over the last few months.  How could this be?

1) many sellers of businesses right now are at an age or stage in their ownership where they've quite honestly been looking for an excuse to sell or do something else; covid-19 is the perfect opportunity for them to get out;

2) many business owners that have been in business for a long time are too tired and exhausted to try and pivot their business business model; they know the kind of effort, dedication and financial burden it is to pivot and they just don't want to do it;

3) some business owners have reached a level of distress and need to sell, or they're going to have to dissolve the business.

These factors are good for buyers looking to invest in and purchase an ongoing business.  There are a number of "famous" businesses going out of business every day.  Can you imagine the value of purchasing a long-standing business with a name, reputation and customers already set for you?  If you're already a business owner, there may be competitors out there looking to sell and you can really increase market share.

Our office helps people buy and sell businesses every day.  Whether you're looking for help with a stock purchase agreement, asset purchase agreement, due diligence or even looking over a business plan, reach out to our office today for help.  We offer convenient locations in center city or the main line.

There's never been a better time to buy a business.

For many business owners, coronavirus is one of the biggest challenges they've had to face. Business-as-usual has gone out the window as masks and social distancing have become the norm. COVID-19 is part of our reality now, at least until a vaccine comes along. Businesses must learn to survive and thrive in the new coronavirus economy.

As a good business owner, you want to protect your customers, your employees, and yourself. Despite your best efforts, what happens if a customer or employee catches COVID-19 and traces their transmission back to your business? Can they sue you?

Like other states, Pennsylvania and New Jersey have both enacted rules on how businesses can reopen and restart services. These policies are in addition to the national guidelines set by the CDC. As your business continues to operate, you must follow all local, state, and federal laws. That's a lot to keep track of, especially when some requirements change daily or weekly depending on the COVID-19 case count in the region.

In response to these changes, many business owners are turning to COVID-19 liability waivers to protect themselves from being sued in case of an outbreak.
Liability waivers are not new. You may even use them already to limit your legal responsibility for accidents or other harms that may occur at your company. Now business owners are using COVID-19 waivers as a way to proactively limit their potential liability by requiring all guests, potential customers, and even employees to sign.

Whether you need a COVID-19 waiver depends on the nature of your business. Your best bet is to talk to an experienced local Pennsylvania and New Jersey business lawyer about your options. Call the Holmes Business Law Firm at 215-482-0285 for a consultation today. We can help you take the right steps to move forward.

What Can a COVID-19 Waiver Do for Your Business?
Because COVID-19 safety guidelines continue to change daily, a liability waiver can help protect you and your company against lawsuits from factors you cannot control.

Simply put, a liability waiver or “release form” is a legal document signed by a customer or employee. The signer agrees to accept certain risks and waive the right to sue your company. You may have noticed more liability waivers lately in places like gyms, salons, restaurants, and doctors’ offices. You may have even signed a COVID-19 waiver yourself in the last few months.

Not all liability waivers are created equal. You need a strong waiver for it to be valid. If your waiver isn’t written correctly, it won’t be enforceable in court. You can't simply create a blanket liability waiver against all harm and expect it to protect your business. In fact, waivers that are too broad are most likely to backfire, leaving you vulnerable to lawsuits.

To be valid, your COVID-19 waiver must be well-crafted and narrowly tailored to its purpose. This is why template liability waivers you find online might not work. If it’s not written specifically for your business, a court may decide that the language is too broad.

In Pennsylvania, a liability waiver is considered valid if it is:
●      Clearly worded with no ambiguities,
●      Prominent (not hidden in the fine print of a long contract), and
●      Signed by the person waiving their right to sue.

Your waiver must make clear exactly what your customers or employees are signing. The average reader should be able to immediately understand they’re signing a document that will limit their legal options for the future.

To be enforceable in Pennsylvania, your coronavirus liability waiver must:
●      Have clear language that focuses on the risks of COVID-19,
●      Avoid “any and all liability” language that is too broad, and
●      Avoid generic or cookie-cutter text, such as from a template.

The more vague or generic your waiver, the less likely it is to be enforced. For example, a waiver against the general risk of contracting a disease or becoming ill would not be enough.

The best COVID-19 waivers with the strongest chance of enforcement should include:
●      A description of the symptoms of the virus,
●      An explanation of how the virus may be transmitted,
●      A statement explaining that asymptomatic carriers could transmit the virus, and
●      Confirmation that the person signing voluntarily and knowingly takes on the risk of contracting COVID-19 by patronizing your business.

You will likely need a separate waiver for customers and employees since each interacts differently with your company. Your lawyer can help you draft both documents in a way that protects your business against liability from all sides.

Limits of a COVID-19 Liability Waiver
Keep in mind that a liability waiver cannot be used to release businesses from reckless, willful, wanton, or intentionally harmful conduct. Out of concern for public policy, you can’t simply waive all liability and then walk away free of all responsibility.

So even if your business has a coronavirus liability waiver, you must still enforce proper protocols to protect customers and employees from transmission of the virus.

That means following local, state, and federal guidelines whenever possible by:
●      Enforcing mask and social distancing policies
●      Implementing new hygiene protocols
●      Performing additional environmental cleaning
●      Encouraging sick employees to stay home
●      Providing personal protective equipment (PPE) when necessary

If you fail to take these reasonable or required precautions, your business could still be on the hook for damages even with a COVID-19 waiver in place.

A dedicated Pennsylvania business lawyer can help you avoid liability by drafting a robust waiver and staying on top of any required workplace safety precautions.

Hiring a Lawyer to Create Your COVID-19 Liability Waiver
The coronavirus pandemic has thrown so much of our lives into uncertainty. Don’t add to your worries by trying to create a liability waiver yourself out of samples you find online. Worst case scenario, you get a waiver that you think will protect you except it gets struck down by a court. This leaves you vulnerable to costly lawsuits.

With the constant news and near-daily changes to coronavirus guidelines both nationally and on the state and local levels, your best option is to cover all your bases with an experienced Pennsylvania and New Jersey business lawyer.

There is no substitute for the personalized solutions we provide every day to our clients at Holmes Business Law. Our attorneys are dedicated to guiding business owners into making the best possible decisions for their business. We are committed to protecting your business for the long haul. You can rest easy with your coronavirus compliance in our hands.

Call our office now at 215-482-0285 to speak to an attorney about creating an enforceable COVID-19 waiver for your business.
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Many small business owners know that the PPP has been nothing short of a total cluster.  While it was great that the legislature initially acted so swiftly to attempt to get aid to small business owners, the PPP rules and regulations were murky and subject to changing provisions on a near-daily basis last month.

Just yesterday, the Senate passed a bill expanding the period for PPP forgiveness and modifying some provisions.  Of note:

1) PPP period will be extended to 24 weeks, instead of 8; many business owners were concerned that the 8 week requirement meant they'd be paying staff while their business was not even operating. This will give business owners an opportunity to pay staff for actually working;

2) the PPP portion mandated to be used for payroll in order to get forgiveness will drop from 75% to 60%.  HOWEVER, it is yet to be determined whether 60% MUST be used to get forgiveness AT ALL.  When it was a 75%, the amount of forgiveness was merely reduced.

3) loan repayment term extended to 5 years, up from the 2 years initially set;

4) new exceptions that would still allow a business owner to get full forgiveness:  1. inability to find qualified workers; and 2. inability to restore business operations to Feb. 15, 2020, levels due to COVID-19 related operating restrictions.

We are glad the legislature has adopted these changes and hope this is signed into law shortly.

Do you have a wedding industry business?

Are you concerned about contracts for upcoming weddings?

Do you need to give back deposits?

What's in your force majeure clause?

How can you make a plan for the future with so much uncertainty?

Join our webinar on Thursday, April 23rd at 9:30am.  Register with the link below.​


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