Franchisors call for rent protection
Landlords are threatening legal action if businesses cannot afford to pay rent, the director of cafe chain Coffee Club says.
Coffee Club and Bird on a Wire director Brad Jacobs said owners of nonessential businesses were being forced to make full rent payments despite having generated no revenue during the past two weeks.
Jacobs said the 66 Coffee Clubs stores, which employed about 800 people, had managed to retain staff through the wage subsidy scheme, but it did not cover overhead costs.
‘‘It’s pointless to have all your staff if your business could close down,’’ Jacobs said.
The Government has frozen rent increases for residential properties for six months, and stopped almost all evictions for three months under urgent coronavirus legislation passed when the lockdown began.
Jacobs said the Government needed to extend its rent increase protection to cover commercial properties as well.
‘‘While some really good landlords have suspended payments, others are sending us strongly worded emails the very next day after rent was due, expecting 100 per cent of the payment,’’ Jacobs said.
Prime Minister Jacinda Ardern said the Government was aware of the issue of commercial leases and was working to find a suitable solution.
Franchise Association of New Zealand chief executive Robyn Pickerill said even the large shopping centre landlords, who had charged very high rent for years, were threatening legal action for unpaid rent as soon as the next day after the rent was due.
‘‘Many franchisees have no ability to
generate income while their premises are inaccessible,’’ Pickerill said.
‘‘They are simply unable to afford to pay. In a very short period of time, this will lead to mass cancellations of leases and loss of businesses as well as other assets owned personally by franchisees, such as the family home.’’
A Kiwi Property spokesman said it was working with tenants to help them and ‘‘sharing a fair proportion of the financial impact caused by the Covid-19 pandemic’’.
‘‘We’re in discussions with many of our tenants about rent relief and other temporary support options, and encourage any others who are having issues with their rent to contact us about potential solutions,’’ he said.
‘‘We’re all in this together and our aim is to ensure our tenants come through this situation and be in a position to resume business as quickly as they can once the Government deems it appropriate.’’
Westfield mall operator Scentre Group has been approached for comment.
According to the Franchise Association, there were more than 630 franchised brands in New Zealand, operating around 37,000 individual businesses whose turnover accounted for 11 per cent of the national GDP.
In a letter to the Government, Pickerill asked for urgent relief to tenants of commercial leases, which included a requirement for landlords and tenants to negotiate a fair rent reduction for the duration of the lockdown, as well as a freeze on eviction processes.
‘‘It’s pointless to have all your staff if your business could close down.’’
Brad Jacobs
Coffee Club and Bird on a Wire director