Commercial Lease Negotiation with Instructor PART I: BACKGROUND INFORMATION: First, having just celebrated its 70th anniversary, AquaFax is a distributor of shark-tank copiers and fax machines. (Yes, you read that correctly: they make copiers and fax machines, which are also aquariums that house sharks). For the past seven (7) years, they've housed a regional office in downtown Greenville, just off the square, paying $2,500 per month for 3,000 square feet of prime office space in a high-end business tower, known colloquially as The Annex. However, in September of this year, this office complex was acquired by Greenville University ("GU"). And, not without coincidence, the University just happens to be one of its largest clients, accounting for 46% of sales in the most recent Fiscal Year ("FY"). Second, AquaFax's highly successful and impeccably dressed Chief Operating Officer ("COO"), Mr. Bryson, was accosted by an inmate of the local federal prison, who walked out during a partial government shutdown. In this event, which took place in October, the assailant followed Mr. Bryson, from his parked Tesla Model S P100D, to the front door of the The Annex. It was at this point that the assailant presented a weapon, and stole Mr. Bryson's iPhone XS Max, containing a list of AquaFax's valuable client contact list. At the time of the incident, the building's security lights were not in operation, due to a lack of maintenance and disrepair. Additionally, The Annex's security officer was on schedule, but away from her post. Third, however, AquaFax withheld December's rent, pursuant to Mr. Bryson's instruction. Though AquaFax was a model tenant at The Annex for a number of years, always paying its rent on time, Mr. Bryson was hoping to get GU to make repairs in this building. In particular, there is water damage in the ceiling of the break room, due to a leak in the water line in the upstairs unit. There are also several cracks in the foundation, as well as a broken window facing the alley. The unit has also not been painted in three years, and clients are starting to comment about this. Moreover, just today there appears to be cockroaches in one of the common areas. Fourth, to make matters worse, AquaFax received written notification from GU about a week ago, stating that The Annex is instituting a "no pets" policy for all commercial tenants, which, in the opinion of GU's representative, Professor Jenkins, according to the letter, includes "sharks." Obviously, this is a problem for AquaFax, since it necessarily uses and proudly displays its own products: office equipment with a transparent glass surface, containing shells, corals, and, of course, sharks. Fifth, for failure to pay rent, GU has served AquaFax with an eviction notice, allowing Mr. Bryson and his company to have 60 days to completely vacate the premises. However, the lease requires 30 days' notice of termination for failure to pay rent, and AquaFax still has 18 months left on its latest two-year lease. PART II: INSTRUCTIONS: Since Mr. Bryson is in Australia, acquiring more sharks (of course!), someone will have to meet with GU's representative, Professor Jenkins, and try to resolve this matter in AquaFax's favor. And, after working for the company for three years, Mr. Bryson has finally given you the opportunity to demonstrate your value, by allowing you to be the one to work out some kind of an agreement with GU to stay in the building. Obviously, the entire Midwest region is relying on your success, not to mention that GU is also an important sales account for the organization. Fifth, for failure to pay rent, GU has served AquaFax with an eviction notice, allowing Mr. Bryson and his company to have 60 days to completely vacate the premises. However, the lease requires 30 days' notice of termination for failure to pay rent, and AquaFax still has 18 months left on its latest two-year lease. PART II: INSTRUCTIONS: Since Mr. Bryson is in Australia, acquiring more sharks (of course!), someone will have to meet with GU'S representative, Professor Jenkins, and try to resolve this matter in AquaFax's favor. And, after working for the company for three years, Mr. Bryson has finally given you the opportunity to demonstrate your value, by allowing you to be the one to work out some kind of an agreement with GU to stay in the building. Obviously, the entire Midwest region is relying on your success, not to mention that GU is also an important sales account for the organization. PART III: SCORING: Please note that this score sheet will be used to rank your performance relative to other students in this course. This rubric is also just for fun. My intention is to give everyone full credit for the assignment, provided that they come prepared! Failure to come prepared may result in a significant reduction in points, or no points at all. Also, please note that there's no wrong way to be prepared - just try to have some kind of plan for how your "negotiation" with me is supposed to go. RESULT? POINTS +40 +20 +30 +10 +20 +10 +5 GOAL Keeping AquaFax in the unit (getting GU to retract the eviction). Securing another two-year lease with an option to renew. AquaFax gets to keep its sharks. GU agrees to fix leak and repair windows. GU agrees to paint/renovate the apartment. GU agrees to improve security. GU apologizes for poor security, and pays AquaFax the fair value for items stolen (note that the cost of a new iPhone XS Max is only part of the loss there's also the value of proprietary information). For each $100 new rent is below $2,500. For each $100 new rent is above $2,500. If AquaFax agrees to pay back rent for February If AquaFax agrees to pay back rent without improvements to the unit. If AquaFax gets evicted OR does not settle with GU (this will result in both parties having to go to court). +5 -5 -10 -20 -40 Commercial Lease Negotiation with Instructor PART I: BACKGROUND INFORMATION: First, having just celebrated its 70th anniversary, AquaFax is a distributor of shark-tank copiers and fax machines. (Yes, you read that correctly: they make copiers and fax machines, which are also aquariums that house sharks). For the past seven (7) years, they've housed a regional office in downtown Greenville, just off the square, paying $2,500 per month for 3,000 square feet of prime office space in a high-end business tower, known colloquially as The Annex. However, in September of this year, this office complex was acquired by Greenville University ("GU"). And, not without coincidence, the University just happens to be one of its largest clients, accounting for 46% of sales in the most recent Fiscal Year ("FY"). Second, AquaFax's highly successful and impeccably dressed Chief Operating Officer ("COO"), Mr. Bryson, was accosted by an inmate of the local federal prison, who walked out during a partial government shutdown. In this event, which took place in October, the assailant followed Mr. Bryson, from his parked Tesla Model S P100D, to the front door of the The Annex. It was at this point that the assailant presented a weapon, and stole Mr. Bryson's iPhone XS Max, containing a list of AquaFax's valuable client contact list. At the time of the incident, the building's security lights were not in operation, due to a lack of maintenance and disrepair. Additionally, The Annex's security officer was on schedule, but away from her post. Third, however, AquaFax withheld December's rent, pursuant to Mr. Bryson's instruction. Though AquaFax was a model tenant at The Annex for a number of years, always paying its rent on time, Mr. Bryson was hoping to get GU to make repairs in this building. In particular, there is water damage in the ceiling of the break room, due to a leak in the water line in the upstairs unit. There are also several cracks in the foundation, as well as a broken window facing the alley. The unit has also not been painted in three years, and clients are starting to comment about this. Moreover, just today there appears to be cockroaches in one of the common areas. Fourth, to make matters worse, AquaFax received written notification from GU about a week ago, stating that The Annex is instituting a "no pets" policy for all commercial tenants, which, in the opinion of GU's representative, Professor Jenkins, according to the letter, includes "sharks." Obviously, this is a problem for AquaFax, since it necessarily uses and proudly displays its own products: office equipment with a transparent glass surface, containing shells, corals, and, of course, sharks. Fifth, for failure to pay rent, GU has served AquaFax with an eviction notice, allowing Mr. Bryson and his company to have 60 days to completely vacate the premises. However, the lease requires 30 days' notice of termination for failure to pay rent, and AquaFax still has 18 months left on its latest two-year lease. PART II: INSTRUCTIONS: Since Mr. Bryson is in Australia, acquiring more sharks (of course!), someone will have to meet with GU's representative, Professor Jenkins, and try to resolve this matter in AquaFax's favor. And, after working for the company for three years, Mr. Bryson has finally given you the opportunity to demonstrate your value, by allowing you to be the one to work out some kind of an agreement with GU to stay in the building. Obviously, the entire Midwest region is relying on your success, not to mention that GU is also an important sales account for the organization. Fifth, for failure to pay rent, GU has served AquaFax with an eviction notice, allowing Mr. Bryson and his company to have 60 days to completely vacate the premises. However, the lease requires 30 days' notice of termination for failure to pay rent, and AquaFax still has 18 months left on its latest two-year lease. PART II: INSTRUCTIONS: Since Mr. Bryson is in Australia, acquiring more sharks (of course!), someone will have to meet with GU'S representative, Professor Jenkins, and try to resolve this matter in AquaFax's favor. And, after working for the company for three years, Mr. Bryson has finally given you the opportunity to demonstrate your value, by allowing you to be the one to work out some kind of an agreement with GU to stay in the building. Obviously, the entire Midwest region is relying on your success, not to mention that GU is also an important sales account for the organization. PART III: SCORING: Please note that this score sheet will be used to rank your performance relative to other students in this course. This rubric is also just for fun. My intention is to give everyone full credit for the assignment, provided that they come prepared! Failure to come prepared may result in a significant reduction in points, or no points at all. Also, please note that there's no wrong way to be prepared - just try to have some kind of plan for how your "negotiation" with me is supposed to go. RESULT? POINTS +40 +20 +30 +10 +20 +10 +5 GOAL Keeping AquaFax in the unit (getting GU to retract the eviction). Securing another two-year lease with an option to renew. AquaFax gets to keep its sharks. GU agrees to fix leak and repair windows. GU agrees to paint/renovate the apartment. GU agrees to improve security. GU apologizes for poor security, and pays AquaFax the fair value for items stolen (note that the cost of a new iPhone XS Max is only part of the loss there's also the value of proprietary information). For each $100 new rent is below $2,500. For each $100 new rent is above $2,500. If AquaFax agrees to pay back rent for February If AquaFax agrees to pay back rent without improvements to the unit. If AquaFax gets evicted OR does not settle with GU (this will result in both parties having to go to court). +5 -5 -10 -20 -40