Legal Question in Business Law in Texas

My husband and his partner are trying to open a restaurant business and we just got the lease agreement from the land lord and I would like to get some legal advice about it. The business form is an LLC.

You can see in the document on the "Tenant" description, both of their names and the DBA name are listed: "John Doe & Jen Doe dba John's Wild Grill LLC". Our main concern is that having their personal names on the contract will cause them to be personally liable in case of default. When we asked the represent of the land lord why their names were also included, she said the reason was that their LLC is brand new. Therefore, their names must be on the contract.

My question is that if this can not be changed, how can we reduce our liability in this scenario? Negotiating a shorter lease term?


Asked on 2/28/11, 1:58 pm

2 Answers from Attorneys
Joseph A. McDermott, III Attorney at Law

Most landlords require personal liability on leases except to national companies with strong credit. However, some will negotiate for less than 100% liability; try and limit the personal libility to the amount the landlord requires to recover his tenant improvment costs -- which can be significant for a restaurant.

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Answered on 2/28/11, 3:24 pm
Kevin B. Murphy Franchise Foundations, APC

As a Franchise Attorney I basically agree with the other attorney answer. From a practical standpoint, the only realistic way to limit your liability is to negotiate a shorter lease term, with options to renew, etc. Consult with a good business or franchise attorney in your area for specific advice.

Mr. Franchise - Kevin B. Murphy, B.S., M.B.A., J.D.

Franchise Foundations, a Professional Corporation

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Answered on 2/28/11, 5:47 pm


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