Yes, it is ethical, but likely not a smart move for you to pay that much. Your business should likely not pay more than 8% of gross income as your rental factor. This means that your Italian Ice business should do $37,500 gross per month, or $1,233 per day/365 days per year in order to justify the rental amount. Also, your rent is $7.50 per sq foot per month, ($90 per sf annually). This does seem excessive to me. I suspect this is NNN also, which if so means that you are going to have the various costs associated with the rental on top of your base rent.
You know why he wants a good Security deposit ($7,000)?.... because he likely thinks like so many operators of food businesses that you will eventually default on your lease. He is only protecting himself.
I would think long and hard whether this is the business you want to be in. If your answer is yes, the Venice Beach location for Italian Ice could be a good location.
Rob Baird, CA RE Lic. #544165 (One of the oldest, active licenses in CA)
Oct 26, 2010