To ensure the stability of a business, it is necessary to own the premises or operate it under a standard 3-6-9 year commercial lease (not a short-term lease).
The premises must first and foremost comply with regulations.
Commercial activity cannot be carried out in premises designated for professional or even residential use, even if it is only conducted in part of the premises.
However, in a commercial lease, it is possible to reserve a portion of the premises for the manager’s residence as an accessory to the business.
The business owner cannot conduct their business in a part of the commercial premises not designated for that purpose. For example, in Paris, they cannot install a kitchen or even ovens for food preparation in a basement cellar.
Some leases are exclusively for commercial use. The business owner will be able to carry out all types of activities, but they must respect the nature and characteristics of the building, and more generally, the condominium regulations. For example, they cannot demand facade and floor repairs necessitated by the storage of goods and the installation of air conditioning units in a residential room in an older building (Cass, Civ 3rd, April 12, 2018, No. 17-11.833).
However, just because the tenant business owner agreed in the lease to take the premises as is does not prevent them from requesting certain repairs from their landlord.
First, the landlord must carry out major repairs (Article 606 of the French Civil Code: repair of walls, roofs, beams, and floors). The landlord must also allow the tenant to carry out the activity stipulated in the lease. This is the landlord’s obligation to deliver the premises in a habitable condition. For example, if a landlord has entered into a lease with a tenant allowing a restaurant business, they must bear the costs of installing an odor and smoke extraction duct.
Similarly, if the commercial lease stipulates that the premises may be open to the public, and the premises do not allow for this, the landlord is responsible for bringing them up to code (French Supreme Court, Third Civil Chamber, July 4, 2019, No. 18-17.107).
Finally, the landlord remains obligated to provide premises that conform to the lease, particularly regarding the permitted business activity (Article 1719 of the French Civil Code). However, they are not obligated to guarantee the commercial viability of the shopping center housing the leased premises. However, if the lease contains a clause (in this case, predating the Pinel Law) stipulating that the shopping center should have a distinct positioning from other centers, not only in terms of environmental quality but also in terms of its architecture and decor, which must be carefully designed, the landlord will be bound, under Article 1134 of the French Civil Code, to uphold their contractual obligations to the tenant. The landlord was ordered to pay damages, the amount of which was determined to correspond to the tenant’s unpaid rent arrears (Cass,civ 3rd, December 15, 2021).
Thus, if there is an explicit clause stating that the landlord must ensure a certain level of commercial viability for the leased premises located in a shopping center, for example, a specific decor or the quality of the other tenants, they must comply. It is therefore essential to carefully examine the lease clauses.
If a commercial lease allows the tenant to operate a takeaway pizza business and discovers that the premises were built without a building permit, this prevents them from insuring the premises, imposes significant restrictions on the business’s development potential, and limits their ability to sell the business due to the risk of losing the premises in the event of an administrative demolition order. The lease termination was ruled to be the landlord’s fault because, by the nature of the contract, and without the need for any specific clause, the landlord is obligated to deliver the leased property to the tenant and maintain it in a usable condition (Cass, civ 3rd, June 1, 2022 / No. 21-11.602).
How to add or change the activity stipulated in the lease?
Adding a related or complementary activity
First:
– If the tenant changes their activity to one already stipulated in the lease, this is perfectly acceptable. This will not constitute a modification of the lease and cannot be considered grounds for raising the rent.
– Similarly, it is not necessary to request the landlord’s permission if the activity is considered “included,” meaning it naturally relates to the initial contractual purpose and its evolution based on commercial practices or customs. The landlord cannot raise the rent.
An included activity relates to the evolution of the business, taking into account customer tastes and expectations. For example, selling quiches, croque-monsieur sandwiches, and pizzas is an activity included in the bakery/pastry shop business.