Fitness Industry Canada conducted an informal survey this week for feedback on how club operators are managing with their landlords.
While many club operators have been able to achieve temporary rent relief, some have had difficulty seeking accommodations or have been advised outright that payments are expected on time. Furthermore, landlords who are making exceptions in the short term may still expect to be fully repaid within 6-12 months.
However, the pressure is continuing to mount on the government to provide supports to help businesses manage their leases. In Toronto on Thursday, Major John Tory indicated he had reached out to both the provincial and federal governments to implement a ban on evicting business tenants and to provide a program to backstop landlords. Other municipal governments across Canada may be applying similar pressures. FitBizWeekly will continue to monitor further developments.
The Canadian Federation of Independent Business (CFIB) offers the following tips:
- When working with your landlords, remember that they are business owners too and many are worried about their own bills (mortgages, utilities, keeping a building running etc.). Check your finances and pay what you reasonably can pay, as you would want your customers to do. If you have a good history with your landlord, they might be more willing to negotiate. Finding new tenants in this economic climate may be more difficult than keeping a good one.
- If you know you can’t make your payment, talk to your landlord. Many are currently renegotiating, and the best scenario is for reasonable people to work out an agreement. Make sure to put any agreements in writing. Here are templates provided by the Nova Scotia government from which you can start:
- Work with your bank to get emergency financing. Money may be available from your bank through the Canada Emergency Business Account or other additional funding that is being underwritten by the federal government. Some of this money may be in the form of interest free or forgivable loans.
- Keep a record of payments you make and discussions you have in this area as this may become important at a later date and will help you keep track of negotiations and monies owed.
- Remember that it’s in everyone’s interest to see your business recover and be able to make full payments again. You cannot legally be evicted without some notice (which varies by province). Check your lease agreement to see the terms but typically at least a few weeks’ notice will be required. CFIB is also asking for temporary provincial protection to prevent renters from being evicted for the duration of the COVID-19 crisis. You can read our full list of rent recommendations here.
FIC Survey Responses:
“My landlord isn’t making any commitments at this time. They are in a wait and see mode. I didn’t pay them April rent and I’m expecting a rent holiday for the duration of this lockdown. If they want to go for anything more I’ll just shut down the business. The ball is in their court.”
CrossFit Studio, Toronto, ON
“My landlord will continue to send bills and I will owe rent plus interest when any money comes in. So far no deferral agreement or reductions. My bank will not let rent be debited until we reopen.
One Family Fitness Centre, Winnipeg, MB
“Landlords have been offering just a couple of months, and then we have to pay back within a year.”
“We were offered a minimum monthly payment.”
“Best of luck to those with leases, however reductions, delays or forgiveness is detrimental to businesses like mine that have chosen to own their building, thus incurring associated costs. In addition, as owner, I have tenants and would hope not to have lost revenue due to leases not paid.”
Fitness Forum, London ON
“I have developed a good relationship with my landlord over many years. I called him and explained that we are closed, have no revenue and I expect him to share in the burden. I am unable to pay while closed. I am not looking for a deferral, but zero rent while we are under government order to close.”
“My landlord charged me full mortgage in April and the months to follow will be 60% of my previous total.”
Atlas Fitness, Marathon, ON
“We are standing hard right now asking for 100% rent abatement, I don’t think we will get that everywhere but we must get abatements on base rent at least.”
Multi-Club Operator, West Coast
“We have spoken to our landlords about holding rent during the time of closure.”
Fitness Connection North York/Richmond Hill, ON
“I am my own landlord and stopped rent payments up until July 1. Property tax payments have been pushed to later in the year and there is some talk that the property tax bills will be reduced.”
Body & Soul Health and Fitness, Vancouver, BC
“I communicated with my landlord through her manager, her response was: We can’t afford to discount rent, they need to pay what they can and get caught up when everything goes back to normal.”
“Our landlord reached out to us to offer support as the crisis started. We asked for consideration. They have offered rent free for April with us still paying CAM. They have said they can provide no other further support for the duration of the crisis.”
Movement Unlimited Inc., Fonthill, ON
“I own two gyms. Gym #1: Landlord has asked that I pay 50% of my rent, and defer the remaining 50% until we re-open. Gym #2: Landlord has deferred our rent 100% until further notice. This will allow us to survive during the lockdown, but then our rent essentially doubles once we re-open, which will not be sustainable for us.”
“We have asked all our franchisees to get in touch quickly with their landlords asking for a rent abatement for the duration of the closure period after exposing the fact that studios have been closed and membership suspended, therefore no revenue coming in. Franchisees are directly discussing with landlords.”
Orangetheory Fitness, Eastern Canada
“As soon as we learned that we would be closed we contacted our landlord to ask for options. Our revenue has been cut off. We cannot meet or sign up members at the gym.”
“We arranged a meeting with our landlord to request a deferment of rent for April and May. That request was approved and we would meet again to discuss restructuring our lease after we are able to resume operations.”
Cobble Hill, BC
“We have ZERO revenue, and been given NO break on our lease. No deferral. Nothing.”
Maple Ridge, BC
“Emailing with landlord/property management telling them what I can pay.”
30 Minute Hit Capilano/Dollarton, BC
“We have communicated with our landlord however he does not want to adjust the rent.”
RHP Training Centre, Sudbury ON
“Trying to collaborate and get several smaller businesses to come together and share rent. There is nothing in my lease that would cover the extent of this, and nothing in common law either. I will not sign up for a loan on rent debt, that is a deferral only with nothing shared by the landlord and bank. The government also needs to step up with rent abatement, not deferrals. I will not sign up or be bullied into signing any rent arrangement in such an uncertain, fluid environment.
“Trying to negotiate by just paying our Municipal taxes and not the rent for a couple of months, after which we would not be able to afford taxes either.”
Flex Total Fitness, QC