Retail News & insights

Following on from the “10 Negotiation Tactics” blog post, this week we want to discuss the concept of BATNA…. when negotiating your lease (or for that matter any important commercial negotiation).

Just as this acronym suggests all negotiations should be treated seriously and must include a considerable level of effective research as part of the preparations.

I’m sure you have all heard me bang on about…”Research is Mandatory…”

Before entering negotiations, you should have at least 1 (more is desirable) alternative(s). And these can come in several forms and can introduce varying but subtle changes to the current commercial environment which work towards new commercial understandings that support your future profitability.

dreamstime_xl_17253996.jpgSuch alternatives can prove to be powerful levers to not only anchour the position you seek to achieve, but to also provide opportunities to “push back from the table,” and re-enter negotiations to either review what has transpired or conduct further research to reach your goals.

For example: you may be approaching a lease expiry and the parties cannot agree on some of the terms. Your BATNA may include agreeing to a short-term extension of the current lease, say 3-6 months. This allows the Lessee not to be pressured into accepting poor lease terms where the expiry is close and the landlord is leveraging same.

Another example is to have offers on alternative premises which when introduced leaves the landlord knowing that you do not have to reach agreement.

A simple BATNA is to open negotiations by stating that any commercial terms need to be reviewed by a third party i.e. your accountant, the BANK – subject to financial approvals, the franchisor/brand, include your Retail Association (The ARA) or any other third party which provides an alternate process to an agreement at the table.

Again, this provides the opportunity for the parties to defer the negotiations, seek more information, and reconvene.

These examples are somewhat simplified and as negotiating a Retail Lease is a complex “layer cake” of commercial issues so too your BATNA(s) can also become quite creative.

And strategically applying a number of BATNA’s, you can with experience steer negotiations towards your targeted outcomes.

Assuming of course you established and anchoured your outcomes at the beginning of the negotiations– but that subject is for another time…

Remember, “Lessee’s Don’t Get What They Deserve…. They Get What They Negotiate!”

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