At its peak, KMart had well over 2,000 retail stores located in the United States. KMart is now down to 3 locations in the US. In part, this is due to the dominance of companies like Walmart, Target and Amazon. The addition of these stores has led to the demise of the discount department store. KMart and other big box retail stores are not alone in having to make decisions over shedding space. Over the last few years, especially at the onset of the pandemic, many businesses are finding themselves in a similar position due to changing business needs and preferences related to working remotely.
Generally speaking, the ability to terminate a lease is governed by the lease agreement. Of course, if you are near the end of your lease term, the issue is less complicated. On the other hand, if you are tied to a long-term lease, early termination can be costly. Depending on whether the lease required a personal guaranty and included a “good guy” clause may also factor into whether terminating a lease prior to the end of the term makes sense.
Alternatively, there may be other options to explore such as an assignment of the lease or subletting part of the space if early termination is not possible.
If you are a business owner in need of guidance around terminating a lease early, the attorneys at Outside Legal Counsel LLP can help assess your options.
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