Queensland retail shop leases

Proposed amendments to Queensland’s retail shop leases legislation could see some significant changes to the rights and obligations of both landlords and tenants of retail shop premises later this year, according to Dibbs Abbot Stillman 's Franchising Report for November 2005. These amendments are likely to affect any franchised business operating from rented premises; particularly those in large shopping centres.

The Retail Shop Leases Amendment Bill 2005 (Qld) was introduced into the Queensland Parliament on 7 June 2005 following extensive consultation with the public and key stakeholder organisations. It is expected that the Bill will amend the Retail Shop Leases Act 1994 (“the Act”) later this year.

Franchisors and franchisees alike understand the importance of competitive lease agreements within the retail industry. The Queensland Government’s review of the Act will attempt to improve the effectiveness and efficiency of the legislation and its impact on retail businesses.

The Act provides mandatory minimum standards for retail shop leases in Queensland and as a general rule, applies to all leased premises from which retail businesses operate, including those in shopping centres. The proposed amendments seek to ensure that the minimum lease standards for retail shop leases are commercially beneficial and practical for landlords, tenants and their professional advisers.

The proposed changes include allowing tenants a longer time in which to terminate, if landlord’s disclosure obligations have not been met, as well as requiring additional commercial information to be disclosed by the landlord, such as annual turnover and pedestrian traffic estimates for shopping centres. The changes also include requiring the tenant to disclose to the landlord information about their business experience, allowing landlords to recover legal and other expenses arising out of requests from the tenant, such as for fit-out or works, consenting to sub-leases and licences and assessing any requested variation to the lease, allowing a greater variety of methods of rent review, placing further obligations on the landlord before relocating tenants, and requiring landlords to pay the reasonable costs of relocation, including the cost of dismantling and reinstalling fixtures and fittings, re-establishing the tenant’s business in the new premises and legal costs.

The objectives of these sweeping amendments are to harmonise, where possible, the Act with its counterpart Acts in other jurisdictions and to maximise the commercial viability of retail shop leasing.

Even though the amendments will not have retrospective application, it is important for franchisors and franchisees with retail shop sites to consider how the proposed amendments will affect their future operations and begin planning accordingly.