O’Connor Cochran LLP legal professionals organized and led the legal teams for multiple major retail rollouts in Southern California. Our name partners handled the U.S. retail rollout for a major international grocery chain, successfully closing more than 150 store site development leases and purchases in 18 months in 4 states. Our lawyers also led the site acquisition program for an East Coast pharmacy chain’s entry into California.
We deliver fast turnaround and predictable pricing for retail rollouts, by using smart structured forms and checklists, and organizing collaborative relationships with brokers, environmental experts, title insurers and others. As a result, O’Connor Cochran LLP offers a successful, proven, systematic approach to acquiring multiple West Coast store sites. We work closely on a business‐aware basis with our retail clients to get their rollouts done quickly, cost‐effectively and in compliance with their priorities.
CHALLENGES AND SOLUTIONS IN RETAIL ROLLOUTS
While every site acquisition program is different, our lawyers know how to solve the problems faced by retailers needing a fast rollout at a predictable price-per-store. That goal often conflicts with the time and legal cost needed to negotiate leases: most small retail lease negotiations are just as complex and almost as time consuming as large leases. We recommend, and have successfully implemented, the following solutions:
(1) Prioritization. Prior to drafting LOIs and form leases, it is vitally important for the retailer and its legal team and brokers to understand the retailer’s “must haves” vs. “like to haves”, especially where there are competing demands.
Understanding the retailer’s priorities, including how firm its specific siting choices are, and what price vs. speed trade‐offs are appropriate, allows us to draft standard LOIs, leases and purchase agreements that focus on the retailer’s goals.
(2) Standardizing Lease Forms. While every deal presents its own challenges, most retailers that are planning at least 25 stores in a region will have the market power to impose their own form lease on landlords. Accepting landlords’ one‐off, non‐standardized leases creates administrative headaches later for property management. Developing and sticking to a short, clearly written standard lease form, and agreed key terms, are central to cost control and closing deals quickly.
(3) Standardizing LOI’s. We strongly recommend having us develop standardized form letters of Intent (“LOIs”) that tie to the retailer’s lease. When the retailer’s brokers use a standardized LOI, it shortens both the time to draft a lease and the time to negotiate it. This approach allows quick, agile lockups of desirable sites. Such LOIs should require the use of the retailer’s lease form, and can be structured to incentivize landlords to respond quickly.
(4) Fast Turnaround. When retailer clients and their brokers use the foregoing approach, we can commit to produce a draft lease within a specified time, such as 2 or 3 business days, which creates a market and negotiating advantage for the retailer.
(5) Shorter Negotiations. Negotiations cost time and money. They can be made shorter if: (a) the retailer and its brokers use standardized LOIs and leases; (b) the retailer’s lease is as short as possible, in plain English and reflects reasonable current market terms; (c) all tenant improvement and development matters are relegated to exhibits, as they won’t be relevant once the premises are developed; and (d) the retailer knows what it needs, and is willing to walk away from some sites if the other side is unreasonable.
(6) Standardizing Processes and Technology. Particularly when leasing small store sites, we recommend that retailers standardize their processes as much as possible. It also makes sense to use available technology to handle deal flow information, such as internet‐accessible deal websites with shared checklists, drafts and other information. This allows retailers and their brokers, lawyers and other service providers to coordinate effectively, and reduces delays caused by miscommunication.
(7) Standardizing Third Party Services. In rollouts, third party service providers are almost always the key resource – or chokepoint. These include title insurance, escrow, survey, environmental, insurance, entitlement consultants, construction, architecture, and engineering providers. Managing them well is essential. The best prices and best service almost always come from negotiating portfolio contracts (with specific staffing and work product standards) with them. In the long run, quality of service and consistency are more important to assure a successful rollout than marginal price breaks. The quality and reliability of the vendors and their work often will affect both the all‐in price for store site closings ‐‐ and whether they occur. Our retail clients often ask us to serve as their “general contractor” by closely coordinating the various professional firms used in such site acquisitions, assisting in selection if needed, ensuring that their needs are being met, and monitoring on‐time performance, so that deals close on time.
(8) Fixed Legal Fees per Store Site. For some of our clients, we have handled store lease and purchase transaction on a fixed fee per store, based on an agreed scope of work and periodic payments upon certain milestones. This requires a high level of standardization, and some initial work by both the client and our lawyers to define the agreed scope of work. We have considerable experience in quickly scaling up large deal teams and managing them, so that our clients have clear contacts accountable for their work. To maximize cost‐efficiency, in some engagements we will delegate some day-to-day work to lower‐priced legal professionals under clear parameters, while providing for immediate re‐escalation if needed to resolve issues that arise.