Negotiating an Exclusivity Clause in Your Dental Lease

Consider: You found the perfect plaza to open your dental practice. On move-in day, you find out the vacant space next to yours has been leased. Turns out, it’s a competing dental practice. The practice puts large banners in the windows, directs traffic towards its space and offers specials for new customers. Where does that leave you and your dental practice? If your lease doesn’t contain an exclusivity clause, you’re out of luck.

Before you sign a lease for your dental practice, try to negotiate an “exclusivity” clause. An exclusivity clause is a provision in your dental lease agreement that can prevent competitors from leasing space in the same complex. Without one, a competing dental practice could run right next to yours, potentially taking away current clients and redirecting potential new clients to itself. An exclusivity clause typically works together with a “use” clause, which you can find more about by clicking here.

You’ll find that many leases do not include exclusivity clauses. That is because landlords typically only agree to let powerful tenants negotiate an exclusivity clause. If such is the case, don’t give up! You may still have the option to propose a more specific, less restrictive exclusivity clause. For example, instead of asking for an exclusivity clause that restricts all other dentists from leasing space, try to negotiate for an exclusivity clause that restricts only a competing specialty.

In addition to ensuring that an exclusivity clause is contained in your dental lease, your lease should impose severe consequences on your landlord if they breach the exclusivity clause. Most likely, allowing you to terminate your lease and vacate the premises won’t be the ideal option, as doing so can cause you to have to put your business on hold and incur significant unexpected expenses. For example, you may have to undertake market research for a new location or pay increased rent. To better protect yourself as a tenant, ensure that if your landlord breaches the exclusivity clause in your lease, you will receive a significant reduction in base rent, among other things.

Article prepared by: Amanda Howard

What to Know When Buying a Dental Practice

Preparing to buy a dental practice may seem like a daunting task. There are many considerations, many of which usually require an expert opinion and guidance. Buying a dental practice involves legal, financing, real estate, and accounting expertise, at the very least, to ensure a smooth deal with the buyer being protected. Here’s what to consider:

Legal

Buying a practice usually means buying the assets of the practice, rather than the corporation itself. In any event, the buyer is taking a significant financial and legal risk and just like any other purchase, you want to make sure that you are getting what you paid for and not any (or at least as little as possible) of the baggage. Every dental transaction should include a well-drafted and thorough purchase agreement which includes substantial representations and warranties by the seller, thorough lists of included and excluded assets, terms addressing restrictive covenants, and disclosures about any potential liabilities affecting the practice. In addition, some transactions might require a portion of the purchase price to be seller financed. In that case, there will be a need for a promissory note and security agreement. As the deal progresses, there might be a need for additional documents to cover an assignment of rights for certain licenses, contracts, and other. Among other things, the final document signed includes a bill a sale, which is like a receipt for the buyer evidencing the sale of the assets.Continue reading

Webinar | Prepping Your Dental Practice for Sale

dental practice for saleChase Howard will present this live lunch n’ learn webinar for attendees interested in learning more about how to effectively prepare for the sale of their dental practice. He will cover issues like who and when to contact when considering a sale, proactive steps to lessen business disruption, when to tell your employees, and other important transition topics.

Preparing your dental practice for sale is quite possibly the biggest decision one can make! Understanding the legal landscape, the investment trends and options as well as what can optimize your business’ sale is essential. This webinar platform provides attendees to ask questions and chat directly with a highly qualified health law attorney.

April 22 @ 12:00 pm – 1:00 pm

Free