[Ohio_Remodeler]

I've got some retail commercial property up for rent in Columbus, OH. A tenant is interested in renting the space and putting in a BYOB strip club (the property is in a rough part of town). He wants to set it up as a private club for members only. Members will pay an annual membership fee, bring their own alcohol, and pay a cover charge. From what I understand, he does not need to get a liquor license as long as his clients bring their own alcohol. He also does not need a food permit as he will not be selling any food. The location is zoned C-4 commercial, and in the city code a night club is listed as one of the allowed uses. Two questions:

1. What licenses, if any, does he need to obtain to open this thing? It seems unbelievable to me that he could just open this up immediately without some type of paperwork being filed.

2. As the property owner, am I putting myself and this asset in financial jeopardy by renting to this person? The property is held in a trust, which is owned by an LLC.

If, for example, the place is shut down because of prostitution or drug activity, how does this affect me? Assuming he can't run the place anymore and his lease is terminated, will I be able to lease it out within a timely manner? Or can the authorities "freeze" the location somehow? Also, if a customer gets shot/injured in or outside the building could I, as the building owner, face any lawsuits?

[ScottGem]

What licenses he has to get are probably not your concern. I would just make sure the lease specified that he must obtain all permits and licenses required for the business. I would talk to your insurance company about your potential liability. As long as you have no financial interest in the business beyond being its landlord, you shouldn't have any.

But I would make sure I had an attorney draw up this lease and make sure it protects you.

[Ohio_Remodeler]

Thanks for the response. I agree with you on the talking to the insurance company and I won't have a financial interest in the business. The primary reason I want to know what licenses are required is to avoid leasing this place out again immediately.

Picture this, I rent to this guy, I get a deposit and some rent. He starts his business without the proper license, police come in and shut him down after 30 days. Now I've got to clean the place, lease it out again, plus the location now has the stigma of being a shutdown club. What's the point of renting it to him if it's going to get shut down?

I'll admit most people would probably lease it without knowing this level of detail. However, I am a control freak and insist on knowing what is required to keep such a business open legally. Knowing this enables me to operate from a position of strength and make a more informed decision, plus I can avoid renting this out again if it's setup correctly initially.

[ScottGem]

You protect yourself by getting sufficient advance rental and security deposit to cover you if he's shut down. Even if you know what permits and licenses are required (and it various from area to area) you won't know that he obtained them.

[excon]

Hello Ohio:

A six month deposit is not unusual in commercial leases for the very reasons you point out. Clearly, he's going to upset some of the town's fathers. If he forgets or neglects to get ANY possible license that the city could require of him, the city will be down on him like white on rice. Frankly, you'd make out quite nicely if they did. What's the problem?

excon

[Emland]

As a manager of a retail space I would absolutely hate for that type of business to open next to me. Expect a lot of grief from the neighbors or current tenants. The whole premise of the business is nothing but trouble.

Prostitution, drug dealing and underage drinking goes on now in legitimate clubs where the licensing is held over the manager's head to somewhat curtail the activities. I can just imagine the deniability and finger pointing when something bad happens and everyone disappears except you, the owner.

~Em

[Ohio_Remodeler]

Thanks for the replies. The space needs to be built out to accommodate this guy's idea. It is currently vanilla box, meaning it has 4 white walls.

Taking the build out and the rough location into consideration I will not be receiving a boatload of money upfront from him. As a matter of fact, I will probably end up giving rental credits to compensate for the build out. I would also like to specify in the lease exactly what permits/licenses he needs to obtain before opening up. I could then discuss this with him and make it a condition of the lease that he gets them and shows it to me. It is in my best interest for him to succeed, in terms of me getting a long-term tenant in this location.

This is this guy's first go round at opening a club. So if his concept is destined to fail from the beginning, why would I want him to start the process of building the space? Sure, I get the space built out, but then I have just limited the type of retail tenant I can get.

In regards to ruffling the feathers of the neighbors - I don't think it will be too much of an issue. There are already a bunch of bars in the area and I personally witnessed a double shooting that occurred outside the building next door - and it's vacant.

So I'm thinking if someone in this forum is not familiar with what permits are needed for this type of business in Columbus, Ohio, I will need to check with a local lawyer. Any idea on what type of lawyer I need to get this info?

[Fr_Chuck]

Actually a call to your local city license dept and the state alcohol ( should be a branch in your city)

But they are right ( at least by the standards that is used in GA, the club has to be a club where you have a membership ( normally bought at the door for 10 bucks or something like that)

Most of the places I know actually make their real money by having a liquor store next door so they have a place to get their bottle to bring their own bottle. Remember part of the trouble with a place like that is there is no large income, bars make their money from mixed drinks or draft beer, a cover charge alone is not bringing in much money normally if there is going to be anything in there to draw them in, a band, even pool tables and a music box costs money.

Next the damge to the building will be extensive, fights, and we won't even talk about what they do to bathrooms.

So yes by and large in the states I know of where it is not a dry city or county ( we have that down here) you can have a private club as long as it has a membership, actually keeps member lists.

But even so, the police can still come in and check because even a private club still can't allow underage drinking.

Now you said your liablity, I will tell you what we did in Atlanta, there was this place that keep having drug sells, prostitution and a hang out for gang members. The police dept starting doing arrest after arrest every week or two. Then the city attorney went to court to show this property as a danger or something to the community and had the property condemned. So you will have to have provisions in the lease that you will evict ( and actually evict them) if they have continued or some limit of illegal activities.

[ltullos]

Are you really this desperate to rent? If the guy doesn't have the funds or experience to meet the start-up demands, you really think he's going to be in better shape in 6 months? This usually isn't the kind of situation or class of people that get better in time. Good luck with whatever you do!

[excon]

Are you really this desperate to rent? This usually isn't the kind of situation or class of people that get better in time.

Hello l:

Desperate?? What do you do with YOUR commercial property - leave it empty? Class of people?? What kind of people would that be??

I'm sure on the side of the tracks you come from, you people don't drink and you never take your clothes off.

excon

[heavenleigh]

Ok to the "manager" of the retail store I would like to say WHATTTTT
Now you make a statement about Prostitution and under age drinking in other clubs. Well.. in members only clubs. They are generally well to do men that are looking to have a discrete entertainment experience and by NO means do I mean sex... I am simply saying not a lot of men that make serious amounts of money want to sit through drunk bachelor parties at the random OVER exposed strip clubs looking at drugged out strippers. Generally (I do know from experience of having well over 15 years in the adult industry) BYOB members only gentlemans clubs are just that gentlemans clubs... for gentleman... not the Frat house boys night out type or the drug dealing in with is homies type place. They are cigar bars, or if they have alcohol martini clubs etc... they have high caliber exotic dancers that could easily put the girls in any edition of Playboy to shame and make them look like street walkers.

As the owner of the property, I would say sign on the dotted line... the property is yours... they are VERY VERY profitable establishments... not seedy or over promoted hang outs for drunk 21 yr boys... As far as cops coming in... why would they need to it is members only... if they came in as long as the local rules for adult entertainment were upheld and advise him to install cameras to always tape the goings on and let members know that they are being taped for their own legal safety... and there is no sex going on... the club will stay in business for a very very long time. An annual membership to these clubs are costly and that is guaranteed revenue for him to pay you the owner the overhead needed.

I think you are putting too much into this. Other than your signature on a line that states you are the owner and that he has to uphold all the rules in it... that is all you are. All these people leaving these paranoid comments about prostituion... sorry not all exotic dancs are hookers NOR do they draw hookers to the area. If you want to guarantee that no one knows this is a "strip club" in the area then put in your lease NO SIGNAGE promoting the adult or strip club activity. (ie... Industrial Strip is the name of a HUGE club here with over 2 million dollars invested in it... you would never know that it is a strip club by the outside... all it is allowed to say is "here it I.S." and the letters I.S. and the address... the city made it llike that... ) the outside looks like a typical industrial building on the inside it puts Las Vegas type clubs to shame... the owner Joe was a friend of mine way back he went through hell but hell pays a LOT of money now... lol.

As long as your building is up to code... the land is up to code... you are safe... What goes in it... not your problem... if they got busted for illegal activity YOU are not liable. If damage is done I am sure that you have insurance do you not.

Don't be paranoid... just do what you are supposed to do... lease your space out to a paying tenant.

Zara