Open Strong Lexicon

Location Terms

The purpose of this lexicon is to make sure every Open Strong lesson, assessment, report, recommendation, prompt, and tool uses the same clear definitions and evaluation standards.

Trade Area

Simple Definition

The geographic area from which a location is reasonably expected to draw a meaningful portion of its customers.

Why It Matters

It defines the real size of the addressable customer base, which affects sales potential, marketing radius, and delivery or catchment planning.

How Open Strong Evaluates It

Open Strong looks at drive-time and walk-time rings appropriate to the format, population and household counts inside those rings, income levels, and whether the concept is a convenience stop (small trade area) or a destination (larger trade area). Trade-area radiuses and drive times are adjusted by concept rather than applied as a single fixed standard.

Green

Trade area population and composition reasonably match or exceed what the business model needs to hit its sales targets, based on comparable units.

Yellow

Trade area is smaller or thinner than ideal, or overlaps heavily with an existing sibling location, requiring adjusted sales expectations.

Red

Trade area is too sparse, too transient, or fundamentally mismatched to the concept, such as a lunch-driven concept in an area with almost no daytime workforce.

Recommended Action

Confirm trade area assumptions with local traffic and demographic data and, where available, the sales performance of comparable concepts nearby before finalizing site commitment.

Visibility

Simple Definition

How easily the site and its signage can be seen by people passing by in vehicles or on foot, from a normal viewing distance and speed.

Why It Matters

Poor visibility suppresses impulse and first-time traffic, increases the marketing cost needed to build awareness, and slows sales ramp-up.

How Open Strong Evaluates It

Open Strong looks at line-of-sight distance, obstructions such as trees or poles, setback from the road, approach speed, signage sightlines from both directions of travel, and position relative to the flow of traffic.

Green

The site is clearly visible from a comfortable distance in both directions of travel with no major obstructions.

Yellow

Visibility is adequate from only one direction, is partially obstructed, or is visible only at close range.

Red

The site is effectively hidden from the roadway, set well back with obstructions, or visible only to traffic already moving away from it.

Recommended Action

Do a physical drive-by and walk-by assessment at different times of day, and confirm what signage will actually be permitted before relying on visibility assumptions.

Accessibility

Simple Definition

How easy it is for a customer to physically get into and out of the site by car, on foot, or by bike.

Why It Matters

Hard-to-enter sites lose customers who pass by rather than make the effort, and can create real safety and traffic-flow problems.

How Open Strong Evaluates It

Open Strong looks at the number and location of curb cuts or driveways, ease of turning in from each direction, presence of a median or turn lane, proximity to intersections and signals, pedestrian access, and customer access and circulation. This is a preliminary business-risk observation only. Open Strong is not performing an ADA, legal, traffic-engineering, or code-compliance inspection.

Green

Multiple easy entry and exit points, a signal or safe turn lane nearby, and access from both directions of travel.

Yellow

Entry is workable but requires a specific maneuver, such as right-in and right-out only or a U-turn, that some customers will avoid.

Red

The site is very difficult to enter or exit safely, has a single dangerous access point, or is effectively cut off from one direction of traffic.

Recommended Action

Walk the access points at peak traffic times and confirm any planned curb cuts or turn lanes with the local traffic authority. Any ADA, legal, traffic-engineering, or code-compliance question should be directed to a qualified professional.

Traffic Count

Simple Definition

The number of vehicles, and often pedestrians, that pass the site during a given period, usually reported as average daily traffic.

Why It Matters

More qualified traffic passing a visible, accessible site generally increases the pool of potential customers, though a high count alone does not guarantee sales.

How Open Strong Evaluates It

Open Strong looks at average daily traffic on the roadway or roadways fronting the site, the speed of that traffic, time-of-day distribution, whether the traffic is passing through or locally relevant, and how the count compares to comparable existing units for the concept. Open Strong does not use one fixed national traffic-count threshold; expectations are set against comparable units for that specific concept.

Green

Traffic counts are at or above levels that have supported strong performance for comparable concepts, with a healthy mix of local and drive-by traffic.

Yellow

Traffic counts are below what similar successful locations have seen, or the traffic is fast-moving and pass-through with limited local relevance.

Red

Traffic counts are very low for the concept type, or nearly all traffic is high-speed pass-through with no practical way to capture it.

Recommended Action

Obtain current traffic count data from a state DOT or a licensed traffic data provider rather than relying on outdated or estimated figures.

Demographics

Simple Definition

The measurable characteristics of the people living and working near the site, such as population, age, household income, and household size.

Why It Matters

Demographics affect whether the local population's size, spending power, and lifestyle fit the concept's target customer and price point.

How Open Strong Evaluates It

Open Strong looks at population and household counts within relevant rings or drive times, median household income, age distribution, household composition, and how these compare to the concept's known customer profile.

Green

Local demographics reasonably match the concept's established target customer profile in both size and income.

Yellow

Demographics are a partial match, such as adequate population but income below the concept's typical price point, or the reverse.

Red

Demographics are clearly mismatched to the concept, with population too small, income far below what the price point requires, or an age profile far outside the target customer.

Recommended Action

Compare local demographic data against the concept's actual customer profile rather than assumptions, and flag unclear fit for franchisor or analyst input.

Daytime Population

Simple Definition

The number of people in the area during business hours because they work, attend school, or otherwise spend the day there, as distinct from the residential population.

Why It Matters

Lunch and daytime-dependent concepts can succeed in areas with modest residential population if daytime population from offices, hospitals, schools, or industry is strong, and the reverse is also true.

How Open Strong Evaluates It

Open Strong looks at the count and density of nearby employers, office, industrial, or institutional square footage, employee counts where available, and how daytime population compares to residential population for the same area. Third-party daytime population estimates are supported by verification of major employment drivers when possible.

Green

Daytime population is strong and well matched to the concept's peak dependency, such as a lunch-heavy concept near a large employment base.

Yellow

Daytime population exists but is modest, seasonal, or concentrated in a way that only partially supports the concept's peak periods.

Red

Daytime population is minimal and the concept depends heavily on daytime traffic that the area cannot supply.

Recommended Action

Identify the specific employers or institutions driving daytime population and verify their current headcount and stability rather than relying on general area estimates.

Competition

Simple Definition

Other businesses nearby that offer similar or substitute products, whether directly competing concepts or complementary, adjacent ones.

Why It Matters

Nearby competition is not automatically bad. A cluster of related businesses can validate that customer demand exists and turn an area into a destination that draws more total traffic than any one business could alone. It can also fragment sales when too many similar concepts target the same customer at the same price point.

How Open Strong Evaluates It

Open Strong looks at the number, brand strength, and proximity of directly competing concepts, the presence of complementary businesses that could form a destination cluster, whether existing competitors appear to be thriving or struggling, and overall category saturation relative to the trade area's population and demand. Open Strong does not use a fixed competitor count to determine saturation.

Green

Some competition is present and appears to be performing well, suggesting proven demand, with apparent room in the trade area for another qualified operator.

Yellow

Competition is heavy enough that the concept will need a clear differentiator, such as price, quality, speed, or location convenience, or there are early signs of category oversaturation.

Red

The trade area already appears saturated with directly competing concepts serving the same customer, with no evidence of unmet demand or points of differentiation.

Recommended Action

Map competitors by category as direct versus complementary, note visible signs of their performance such as parking activity, hours, and reviews, and treat any read on saturation as a hypothesis to validate with local market research rather than a fixed conclusion.

Parking

Simple Definition

The number, location, and convenience of parking spaces available to customers at or near the site, whether dedicated to the site or shared with other tenants.

Why It Matters

Insufficient, awkward, or unclear parking is a common reason customers choose a competitor instead, especially during peak hours.

How Open Strong Evaluates It

Open Strong looks at total parking supply versus the concept's typical peak-hour need, proximity of spaces to the entrance, whether parking is dedicated or shared with other tenants, real peak-period availability, ease of circulation within the lot, any parking restrictions, competing demand from other tenants at overlapping peak times, lighting and visibility of the lot, and any local parking-ratio requirements. Parking is not required to be dedicated to qualify as Green; shared shopping-center parking can support a Green rating when total supply, peak-period availability, proximity, circulation, restrictions, and competing tenant demand adequately support the concept. Parking expectations are also adjusted by concept, peak demand, lease restrictions, and local requirements rather than a single fixed standard.

Green

Parking, whether dedicated or shared, provides enough supply to meet the concept's typical peak-hour need close to the entrance and is easy to navigate. For shared shopping-center parking, this depends on the total parking supply, real peak-period availability, proximity, circulation, restrictions, and competing tenant demand from other tenants all adequately supporting the concept.

Yellow

Parking is adequate most of the time but tight during peak hours, shared with other tenants in a way that creates real competition for spaces during overlapping peak periods, or requires a longer walk than ideal.

Red

Parking is clearly insufficient for the concept's expected peak demand, unsafe, very difficult to access, or effectively unavailable, such as street parking only in a busy commercial corridor.

Recommended Action

Confirm the actual parking count, any shared-use arrangements, peak-period availability, and restrictions against local code and the concept's historical peak-hour parking needs before assuming the lot is sufficient.

Signage

Simple Definition

The physical signs, including building signage, pylon or monument signs, and window signage, that identify the business to passersby.

Why It Matters

Even a well-located site underperforms if signage is not visible, legible, or permitted at a size and height that works for the site's traffic speed and setback.

How Open Strong Evaluates It

Open Strong looks at what signage is physically possible on the site, what local sign code and any landlord or center restrictions actually permit, sightline distance to signage from approaching traffic, and whether the site shares signage with other tenants.

Green

The site allows for the concept's standard signage package at a size, height, and location that will be clearly visible to approaching traffic, with no major code restriction.

Yellow

Some signage is possible but is restricted in size, height, or placement compared to the concept's standard, or must be shared with other tenants on a single pylon.

Red

Local sign code, landlord restrictions, or site conditions prevent adequate signage altogether, or signage would be visible only at very close range.

Recommended Action

Verify actual sign permissions in writing with the local jurisdiction and the landlord or center management. Do not assume the concept's standard sign package will be approved.

Site Suitability

Simple Definition

The overall fit of a specific space, primarily an existing restaurant or retail lease space, for the concept's operational and building requirements. Ground-up sites are evaluated using this same standard where applicable.

Why It Matters

A site can score well on trade area, traffic, and visibility and still fail if the space itself cannot physically, legally, or economically support the concept's equipment, layout, and operations without cost-prohibitive renovation.

How Open Strong Evaluates It

Open Strong primarily evaluates existing restaurant and retail lease spaces, looking at square footage and layout against the concept's standard footprint, the space's prior use, zoning and permitted use, electrical capacity, HVAC, plumbing, presence and condition of a grease trap or interceptor, hood and fire-suppression systems, gas availability, restrooms, delivery and trash access, renovation requirements to bring the space to the concept's standard, certificate of occupancy or change-of-use requirements, and overall utility capacity and physical condition. For ground-up sites, Open Strong also considers lot size and shape, zoning and permitted use, utility availability, and drive-thru stacking or lane requirements where applicable, but these ground-up, site-plan factors are secondary to the lease-space evaluation described above. Restaurant-specific building systems such as grease traps, hoods, fire-suppression, and gas service are evaluated only when the concept actually requires them; a concept with no such requirement is not penalized for their absence.

Green

The space, or for a ground-up site the parcel, is a clean match for the concept's requirements, with adequate square footage and layout, compatible zoning and prior use, sufficient utility and building-system capacity, and all concept-specific restaurant or retail infrastructure available or reasonably achievable, requiring only normal buildout.

Yellow

The space is workable but requires meaningful renovation, upgraded utility capacity, a non-standard layout, a zoning or use variance, or a change-of-use or certificate-of-occupancy process before it can be considered a clean fit.

Red

The space or parcel cannot reasonably support the concept's requirements as-is, such as wrong zoning with no realistic path to change, insufficient square footage or an unworkable layout, a prior use that would make renovation cost-prohibitive (for example converting a non-food use to add a hood, grease interceptor, or gas service), or utility capacity that cannot feasibly be upgraded.

Recommended Action

Have a qualified contractor or engineer inspect electrical, HVAC, plumbing, and any concept-required grease trap or interceptor and hood and fire-suppression systems, and confirm zoning, permitted use, and certificate-of-occupancy or change-of-use requirements with the local jurisdiction before treating the space as suitable. This determination should not rest on visual inspection alone.

Official Evaluation Rules

These principles govern how Open Strong applies the ratings above and apply across every location evaluation.

Do not use one fixed national traffic-count threshold. Traffic-count expectations are set against comparable units for the specific concept being evaluated.
Trade-area radiuses and drive times must vary by concept rather than applying a single standard ring or drive-time to every evaluation.
Do not use a fixed competitor count to determine saturation. Saturation is judged relative to the trade area's population and demand for that specific concept.
Third-party daytime population estimates should be supported by verification of major employment drivers when possible, rather than accepted on their own.
An unapproved zoning variance or use approval cannot receive a Green rating.
Parking expectations must vary by concept, peak demand, lease restrictions, and local requirements rather than a single fixed standard.
All Open Strong ratings are preliminary business-risk evaluations and not legal, zoning, engineering, environmental, ADA, or code-compliance determinations.

Items Requiring John's Expert Review

The following definitions, rating standards, assumptions, or recommendations should be reviewed by John before they become official Open Strong System standards.

Category-specific guidance based on comparable locations: how Open Strong should keep refining traffic, trade area, competition, and parking guidance using comparable existing units for each specific concept category, since standards already vary by concept rather than by fixed thresholds.
Signage code exceptions: which restrictions should be treated as yellow (workable with adjustment) versus red (effective dealbreaker).
Parking ratio benchmarks: confirm expected parking ratios per restaurant or retail format (seats, square footage, drive-thru stacking) used to set green/yellow/red thresholds, including shared-parking scenarios.
Review all Accessibility and Site Suitability language for anything that could be read as a legal, ADA, engineering, zoning, or code-compliance conclusion rather than a preliminary, non-binding flag.

Open Strong Lexicon

Lease Terms

The purpose of this lexicon is to make sure every Open Strong lesson, assessment, report, recommendation, prompt, and tool uses the same clear definitions and evaluation standards. This section covers the core U.S. restaurant and retail lease terms Open Strong reviews when evaluating a deal. It explains what each term means in plain language and is not legal advice.

Base Rent

Simple Definition

The fixed minimum rent a tenant pays the landlord, usually stated per year or per month, before any other charges are added.

Why It Matters

Base rent is normally the largest fixed cost in the deal, so it drives whether the location can hit a healthy occupancy-cost percentage against projected sales.

How Open Strong Evaluates It

Open Strong compares base rent, expressed per square foot and as a percentage of projected sales, against comparable units for the concept and against the target of 10% of sales or less for total occupancy cost.

Green

Base rent, combined with other occupancy costs, keeps total occupancy cost at or below 10% of projected sales, the level that has supported healthy profitability for comparable units.

Yellow

Base rent pushes total occupancy cost above 10% of projected sales but could still work if sales come in strong or other costs are unusually low.

Red

Base rent alone pushes total occupancy cost well beyond 10% of projected sales in a way comparable units can't absorb.

Recommended Action

Model base rent against a realistic, conservative sales estimate before treating the deal as workable, targeting total occupancy cost of 10% of sales or less, and compare it to actual occupancy-cost results from similar locations, factoring in any landlord concessions as part of total economics.

CAM

Simple Definition

Common Area Maintenance charges, the tenant's share of the cost to maintain and operate shared areas of a shopping center, such as parking lots, landscaping, and shared lighting.

Why It Matters

CAM adds to total occupancy cost on top of base rent and can rise year to year, sometimes significantly, in ways that are easy to underestimate at signing.

How Open Strong Evaluates It

Open Strong splits CAM into uncontrollable items, such as real estate taxes, insurance, and snow removal, which are not expected to be capped, and controllable items, such as management fees, on-site manager salaries, and center remodeling costs, which should be capped at 5% or less annually. Open Strong looks at the current CAM rate per square foot, how it is categorized and capped, and how CAM has trended historically at that center when history is available.

Green

Controllable CAM items (management fees, manager salaries, and center remodeling costs) are capped at 5% or less annually, and uncontrollable items (taxes, insurance, and snow removal) are appropriately left uncapped, since capping them isn't realistic to request.

Yellow

Controllable CAM items are capped above 5% annually or the cap is unclear or vaguely itemized, adding uncertainty to future occupancy cost.

Red

Controllable CAM items are uncapped or capped well above 5% annually, or uncontrollable costs like taxes, insurance, and snow removal are bundled in with controllable items in a way that obscures the cap.

Recommended Action

Request CAM history for the past several years and a breakdown split between controllable and uncontrollable categories, and negotiate a 5% or less annual cap on controllable items such as management fees, manager salaries, and center remodeling costs. Do not expect or request a cap on uncontrollable items such as taxes, insurance, and snow removal.

Additional Rent

Simple Definition

Any charge beyond base rent that the tenant is obligated to pay under the lease, commonly including CAM, real estate taxes, insurance, and sometimes a merchants' association or marketing fund fee.

Why It Matters

Additional rent is what turns a deal that looks affordable on base rent alone into one that may not be, since total occupancy cost is what actually matters to profitability.

How Open Strong Evaluates It

Open Strong looks at every component that makes up additional rent, adds it to base rent to calculate total occupancy cost, and compares that total to the concept's typical target of 10% of sales or less.

Green

Additional rent is clearly itemized, in line with market norms, and total occupancy cost stays at or below 10% of sales.

Yellow

Some additional rent components are unclear or estimated rather than actual, adding uncertainty to the total occupancy-cost picture.

Red

Additional rent is poorly disclosed, unusually high, or pushes total occupancy cost above 10% of sales once combined with base rent.

Recommended Action

Request a full, itemized additional rent breakdown before finalizing occupancy-cost projections, rather than relying on a landlord's summary estimate, and confirm the combined total stays within the 10% of sales target.

Lease Term

Simple Definition

The length of time the lease runs before it expires, not counting any renewal option periods.

Why It Matters

A term that is too short creates risk of losing the location, and the investment in it, before the business has time to mature; a term that is too long without flexibility can lock in an underperforming site.

How Open Strong Evaluates It

Open Strong looks at the initial term length relative to the time typically needed to recover buildout investment and reach stabilized sales for the concept, alongside what renewal options exist.

Green

The initial term is long enough to reasonably recover the investment and reach stabilized performance, with renewal options available beyond that.

Yellow

The initial term is shorter than ideal for the investment size, though renewal options or other factors partially offset the risk.

Red

The initial term is too short to reasonably recover the investment even under normal performance, with no adequate renewal options to extend it.

Recommended Action

Compare the initial term against the concept's typical buildout investment and time-to-stabilization, and treat a short term with no renewal options as a significant flag.

Renewal Options

Simple Definition

The tenant's right, but not obligation, to extend the lease for one or more additional periods at terms set out in advance, such as a set rent increase or a formula for a new market rent.

Why It Matters

Renewal options protect the value built up in a proven location and give the tenant control over whether to stay, rather than leaving that decision entirely to the landlord.

How Open Strong Evaluates It

Open Strong looks at how many renewal options exist, the length of each, and how renewal rent is set. A vague "market rent" renewal formula is treated as inadequate; renewal rent should instead be tied to asking rents at comparable nearby centers, and renewal increases should target 3% annually or less. Open Strong also checks any notice deadlines required to exercise the options.

Green

Multiple renewal options exist with clear rent terms, either a fixed increase of 3% annually or less or a formula tied to asking rents at comparable nearby centers, and reasonable notice deadlines the tenant can realistically track.

Yellow

Renewal options exist but rent terms rely on a vague, undefined "market rent" standard, increases run above 3% annually, or notice deadlines are tight and easy to miss.

Red

No renewal options exist, or renewal is entirely at the landlord's discretion with no rent formula tied to actual comparable rents.

Recommended Action

Confirm renewal rent formulas reference asking rents at comparable nearby centers rather than an undefined "market rent," target renewal increases of 3% annually or less, and calendar every notice deadline well in advance rather than relying on memory.

Rent Increases

Simple Definition

Scheduled increases to base rent over the lease term, commonly a fixed percentage or dollar amount at set intervals, or tied to an index such as inflation.

Why It Matters

Rent increases that outpace realistic sales growth erode profitability over time even if the deal looks affordable in year one.

How Open Strong Evaluates It

Open Strong looks at the size and frequency of scheduled increases, whether they are fixed or index-based, and models them forward against a realistic sales growth assumption for the concept.

Green

Increases are modest, predictable, and in line with or below realistic sales growth expectations for the concept.

Yellow

Increases are steeper than typical or based on an uncapped index, creating meaningful risk if sales growth does not keep pace.

Red

Increases are large, frequent, or uncapped in a way that is likely to outpace realistic sales growth well before the term ends.

Recommended Action

Model rent increases year by year against a conservative sales growth assumption for the full term, not just the opening year.

Security Deposit

Simple Definition

An amount of money, or sometimes a letter of credit, held by the landlord to cover potential tenant default, typically returned at the end of the lease if obligations are met.

Why It Matters

The deposit amount affects upfront cash needed to open, and its terms determine how much of that cash the tenant can expect back and under what conditions.

How Open Strong Evaluates It

Open Strong looks at the deposit amount relative to market norms and monthly rent, what conditions allow the landlord to draw on it, and whether any step-down or reduction is available over time.

Green

The deposit is in line with market norms, draw conditions are clearly defined, and a reasonable step-down schedule exists if applicable.

Yellow

The deposit is above typical market levels, draw conditions are broadly worded, or no step-down exists over a long term, adding some uncertainty about return.

Red

The deposit is unusually large relative to rent, return terms are unclear, or draw conditions give the landlord broad discretion to keep it. The absence of a step-down alone is not a red flag.

Recommended Action

Confirm the exact draw conditions and return terms in writing, and factor the full deposit into upfront cash-needed projections.

Personal Guarantee

Simple Definition

A promise by an individual, often the business owner, to personally cover lease obligations if the business entity fails to pay, putting personal assets at risk rather than only the business.

Why It Matters

A personal guarantee changes the tenant's real financial exposure if the location underperforms, extending risk beyond the business itself.

How Open Strong Evaluates It

Open Strong looks at whether a personal guarantee is required at all, its scope such as full term versus a limited period, whether it burns down over time, and any cap on the guaranteed amount. Open Strong's guiding standard limits total personal guarantee exposure to no more than one year of full rent during any lease term or option period.

Green

No personal guarantee is required, or total exposure is capped at no more than one year of full rent during any lease term or option period and burns down on a defined schedule.

Yellow

A personal guarantee is required with exposure beyond one year of full rent, or with only a partial or unclear burn-down provision.

Red

A full, uncapped personal guarantee is required for the entire lease term with no burn-down or limitation, exposing well more than one year of full rent.

Recommended Action

Negotiate a cap limiting total personal guarantee exposure to no more than one year of full rent during any lease term or option period, and have the specific guarantee language reviewed by a qualified attorney before signing. This is a business-risk flag only, not legal advice.

Permitted Use

Simple Definition

The lease clause defining exactly what type of business and activities the tenant is allowed to operate in the space.

Why It Matters

A permitted use clause that is too narrow can block future menu changes, added services, or a pivot in concept, even within the same general business category.

How Open Strong Evaluates It

Open Strong reviews the exact wording of the permitted use clause against the concept's current operations and any reasonably foreseeable additions, such as delivery, catering, alcohol service, or a drive-thru.

Green

The permitted use clause is broad enough to cover the concept's current operations plus reasonably foreseeable additions without needing a lease amendment.

Yellow

The permitted use clause covers current operations but is narrowly worded and would require landlord consent or an amendment for likely future additions.

Red

The permitted use clause is narrower than the concept's actual planned operations, creating an immediate compliance problem rather than just a future one.

Recommended Action

Compare the exact permitted use wording against the concept's full current and reasonably expected operations, and negotiate broader language before signing rather than after.

Exclusive Use

Simple Definition

A lease provision that prevents the landlord from leasing other space in the same center to a business selling a directly competing product or offering, and separately, any exclusive-use restrictions other tenants already hold that could limit this tenant.

Why It Matters

An exclusive-use right protects the tenant from a direct competitor moving in next door, while an existing exclusive held by another tenant can quietly restrict what this tenant is allowed to sell.

How Open Strong Evaluates It

Open Strong looks at whether the tenant is requesting or receiving an exclusive-use right, its scope and enforcement mechanism, and whether any other tenant's existing exclusive-use clause would restrict this concept's offerings. A clearly written exclusive-use provision should be requested and included in almost all cases, not treated as optional.

Green

The tenant holds a reasonably scoped, clearly written exclusive-use right, which Open Strong expects in almost every deal, and no existing tenant exclusive restricts this concept's core offerings.

Yellow

No exclusive-use right is offered even though one would typically be expected for this type of deal, or an existing tenant exclusive imposes a minor restriction the concept can work around.

Red

An existing tenant exclusive directly conflicts with core parts of this concept's offering, such as a competing coffee exclusive blocking a planned coffee program.

Recommended Action

Request a clearly written exclusive-use provision in almost every deal, request written disclosure of any existing exclusive-use restrictions affecting the tenant's planned use, and confirm no conflict exists with the concept's actual and planned offerings. Complete copies of other tenants' clauses are not required.

Official Evaluation Rules

These principles govern how Open Strong applies the ratings above and apply across every lease evaluation.

Total occupancy cost, meaning base rent plus additional rent, is the standard Open Strong evaluates against, not base rent in isolation.
The target for total occupancy cost is 10% of sales or less; occupancy cost above 10% increases risk and calls for added scrutiny.
Uncontrollable CAM items, such as real estate taxes, insurance, and snow removal, are not capped. Controllable CAM items, such as management fees, on-site manager salaries, and center remodeling costs, should be capped at 5% or less annually.
Rent increases must be modeled forward across the full lease term against a realistic, conservative sales growth assumption, not evaluated only at the opening-year rent.
Personal guarantee exposure should be limited to no more than one year of full rent during any lease term or option period.
Renewal rent should not rely on a vague "market rent" standard; it should not exceed asking rents at comparable nearby centers, and renewal increases should target 3% annually or less.
A clearly written exclusive-use provision should be requested and included in almost all lease deals.
A lease's permitted use clause must be checked against the concept's full current and reasonably foreseeable operations, not just its primary product.
Any existing tenant exclusive-use clause at a shopping center must be checked for conflict with this concept's actual and planned offerings before a site is treated as clear.
All Open Strong lease-term ratings are preliminary business-risk observations, not legal advice or a substitute for attorney review of actual lease language.

Open Strong Lexicon

Financial Terms

The purpose of this lexicon is to make sure every Open Strong lesson, assessment, report, recommendation, prompt, and tool uses the same clear definitions and evaluation standards. This section covers the core U.S. restaurant and retail financial terms Open Strong reviews when evaluating a deal. It explains what each term means in plain language and is not financial, accounting, or investment advice.

Total Occupancy Cost

Simple Definition

Base rent plus additional rent, such as CAM, taxes, insurance, and other required lease charges, expressed as a percentage of projected sales.

Why It Matters

Total occupancy cost is the single most important rent-side number in the deal because it reflects the tenant's real cost of holding the space, not just the headline base rent figure.

How Open Strong Evaluates It

Open Strong adds every required lease charge together and divides that total by conservative projected sales, then compares the result against the 10% of sales benchmark used across the Open Strong system.

Green

Total occupancy cost is 10% or less of conservative projected sales.

Yellow

Total occupancy cost runs above 10% but below 14% of conservative projected sales, which may still work with a strong concept or unusually low other costs.

Red

Total occupancy cost is 14% or higher of conservative projected sales, a level comparable units can't reasonably absorb.

Recommended Action

Calculate total occupancy cost against a conservative, not optimistic, sales projection before treating a deal as workable, and revisit the calculation any time base rent, CAM, or the sales estimate changes.

Projected Sales

Simple Definition

A conservative, realistic estimate of the annual sales volume a specific location is expected to generate once it reaches normal operating performance.

Why It Matters

Every other financial benchmark in this lexicon, including occupancy cost, break-even, and return on investment, is calculated against projected sales, so an inflated projection makes every downstream number look better than it really is.

How Open Strong Evaluates It

Open Strong reviews projected sales against comparable-unit actuals for the concept, local trade-area demographics and competition, and any site-specific factors, favoring the more conservative end of a reasonable range rather than a best-case scenario.

Green

Projected sales are built from comparable-unit actuals and verifiable trade-area data, and sit at or below the conservative end of a reasonable range for the concept.

Yellow

Projected sales rely partly on comparable data and partly on optimistic assumptions about the trade area or concept performance that have not been verified.

Red

Projected sales are based mainly on optimistic assumptions, a landlord's or broker's estimate, or a best-case scenario with little grounding in comparable-unit actuals.

Recommended Action

Build projected sales from comparable-unit actuals and verifiable trade-area data first, treat any landlord or broker sales estimate as a starting point to verify rather than accept, and use the conservative end of a reasonable range for every downstream calculation.

Rent-to-Sales Ratio

Simple Definition

Base rent alone, without additional rent, expressed as a percentage of projected sales.

Why It Matters

This ratio isolates the base rent component so it can be compared cleanly against comparable deals, even though total occupancy cost, not this ratio alone, is the ultimate benchmark that matters.

How Open Strong Evaluates It

Open Strong divides annual base rent by conservative projected sales and compares the result to typical base rent ratios for comparable units of the concept, while still evaluating the deal primarily on total occupancy cost.

Green

The rent-to-sales ratio is in line with or below typical base rent ratios for comparable units of the concept.

Yellow

The rent-to-sales ratio runs above typical comparable levels but total occupancy cost still stays within an acceptable range because other costs are low.

Red

The rent-to-sales ratio is well above typical comparable levels in a way that leaves little room for additional rent before total occupancy cost becomes unworkable.

Recommended Action

Use the rent-to-sales ratio as a quick comparison against similar deals, but always confirm the full picture with total occupancy cost before making a decision.

Break-Even Sales

Simple Definition

The sales volume a location must generate to cover all fixed and variable costs, including occupancy cost, labor, cost of goods, and other operating expenses, with zero profit or loss.

Why It Matters

Break-even sales sets the floor the location must clear just to survive; the further conservative projected sales sit above that floor, the more cushion the deal has against a slow ramp-up or a soft market.

How Open Strong Evaluates It

Open Strong builds a full cost model, including occupancy cost, labor, cost of goods sold, and other fixed and variable expenses, to calculate the sales level at which the location covers all costs, then compares that figure to conservative projected sales.

Green

Conservative projected sales exceed break-even sales by a healthy margin, giving the location meaningful cushion if performance comes in below plan.

Yellow

Conservative projected sales exceed break-even sales but only by a thin margin, leaving little room for a slow ramp-up or underperformance.

Red

Conservative projected sales are at or below break-even sales, meaning the location is not expected to be profitable even under normal conditions.

Recommended Action

Build a full break-even model covering occupancy cost, labor, cost of goods, and other operating expenses before opening, and require a meaningful cushion between break-even sales and conservative projected sales rather than a razor-thin margin.

Buildout Cost

Simple Definition

The total cost to design and construct the space for opening, including permits, architectural and engineering fees, construction, fixtures, equipment, and signage.

Why It Matters

Buildout cost is usually the largest upfront investment in the deal, and it directly determines how much time is needed to recover that investment and how much a Tenant Improvement Allowance actually offsets.

How Open Strong Evaluates It

Open Strong reviews a detailed buildout budget by category against comparable-unit actuals for the concept, watching for missing categories, such as permits or contingency, and comparing total buildout cost to the Tenant Improvement Allowance being offered.

Green

The buildout budget is itemized by category, in line with comparable-unit actuals, includes a reasonable contingency, and is clearly compared against any Tenant Improvement Allowance.

Yellow

The buildout budget is missing some categories, such as contingency or permit costs, or runs somewhat above comparable-unit actuals without a clear explanation.

Red

The buildout budget is a rough lump-sum estimate with no category detail, omits a contingency entirely, or runs well above comparable-unit actuals with no explanation.

Recommended Action

Require a detailed, itemized buildout budget with a contingency line before signing, benchmark it against comparable-unit actuals for the concept, and net it against any Tenant Improvement Allowance to determine true out-of-pocket investment.

Tenant Improvement Allowance

Simple Definition

A contribution from the landlord toward the tenant's buildout cost, usually stated as a dollar amount per square foot and often paid out after specific construction milestones or opening.

Why It Matters

The allowance directly reduces the tenant's out-of-pocket buildout investment, but only to the extent it is actually collectible on terms the tenant can meet.

How Open Strong Evaluates It

Open Strong reviews the allowance amount per square foot against market norms, the specific conditions and milestones required for payout, the timing of payment relative to when buildout costs are incurred, and any clawback provisions if the tenant defaults or closes early.

Green

The allowance amount is in line with market norms, payout conditions and timing are clearly defined and reasonably achievable, and clawback provisions are limited and clearly disclosed.

Yellow

The allowance is in line with market norms but payout is tied to milestones that create a timing gap with buildout spending, or clawback provisions are broader than typical.

Red

The allowance is below market norms, payout conditions are vague or difficult to meet, or clawback provisions could require repayment well beyond a reasonable early-closure window.

Recommended Action

Confirm the exact payout milestones and timing in writing, model the cash-flow gap between when buildout costs are paid and when the allowance is reimbursed, and negotiate clawback provisions down to a reasonable, clearly defined window.

Opening Budget

Simple Definition

The total opening capital required to get the location open, including buildout cost net of any Tenant Improvement Allowance, security deposit, pre-opening labor and training, initial inventory, licensing and permit fees, and a working capital reserve.

Why It Matters

An opening budget that only counts construction cost understates the real cash required and can leave a new location undercapitalized before it ever opens.

How Open Strong Evaluates It

Open Strong reviews the opening budget line by line to confirm it includes net buildout cost, deposit, pre-opening labor, initial inventory, licensing, and a working capital reserve, and compares total opening capital required to the capital actually available, while confirming working capital is tracked as a separate, protected reserve within that total rather than commingled with the other categories.

Green

The opening budget itemizes every major category, including a working capital reserve held as a separate, protected line within total opening capital required, and total capital available covers the full budget with a reasonable cushion.

Yellow

The opening budget is missing one or more categories, such as a working capital reserve or pre-opening labor, or available capital covers the budget with little to no cushion.

Red

The opening budget significantly understates true cash needs by omitting major categories, or available capital falls short of the full budget as itemized.

Recommended Action

Build the opening budget to include net buildout cost, deposit, pre-opening labor and training, initial inventory, licensing and permits, and a working capital reserve, hold that working capital reserve as a separate, protected component of total opening capital required, and do not proceed until capital available covers the full itemized budget with a cushion.

Working Capital

Simple Definition

Cash counted as part of total opening capital required, but held as a separate, protected reserve to cover operating losses and cash-flow gaps while the location ramps up toward stabilized sales.

Why It Matters

Most new locations operate at a loss for a period after opening, and without a dedicated working capital reserve, that ramp-up period can drain cash needed for day-to-day operations.

How Open Strong Evaluates It

Open Strong sizes the working capital reserve against the expected sales ramp-up period and projected operating losses during that period, includes it in total opening capital required, and confirms it is held as a separate, protected reserve rather than a rough add-on that can be drawn down for buildout or other opening-budget categories.

Green

Working capital is sized to cover the full expected ramp-up period and projected operating losses during that period, is counted within total opening capital required, and is held as a separate, protected reserve not available for other opening-budget categories.

Yellow

Working capital covers only part of the expected ramp-up period or projected losses, or it is not clearly held as a separate, protected reserve from the rest of the opening budget, creating risk if the ramp-up runs longer than planned.

Red

Little to no dedicated working capital reserve exists within the total opening capital required, or the reserve has been commingled with other opening funds, leaving no cushion if the location takes longer than expected to reach stabilized sales.

Recommended Action

Size working capital specifically against the expected sales ramp-up period and projected operating losses during that period, not as a rough percentage add-on, count it as part of total opening capital required, and hold it in a separate, protected reserve rather than treating it as available for buildout overruns.

Sales Ramp-Up

Simple Definition

The period after opening during which sales are expected to climb from initial levels to stabilized, ongoing performance.

Why It Matters

The length and shape of the ramp-up period drives how much working capital is needed and how long it will take before the location becomes profitable.

How Open Strong Evaluates It

Open Strong reviews the assumed ramp-up timeline and monthly sales curve against comparable-unit actuals for the concept and trade area, rather than accepting an assumed straight-line jump to stabilized sales.

Green

The ramp-up timeline and monthly sales curve are grounded in comparable-unit actuals, and working capital is sized to cover the full assumed ramp-up period.

Yellow

The ramp-up timeline is a rough estimate not clearly tied to comparable-unit actuals, or working capital only partially covers the assumed period.

Red

The plan assumes an unrealistically fast ramp-up to stabilized sales with no comparable-unit support, or no ramp-up period is modeled at all.

Recommended Action

Model a realistic month-by-month ramp-up curve based on comparable-unit actuals for the concept and trade area, and size working capital to the full length of that assumed period rather than a rough estimate.

Return on Investment

Simple Definition

The profit a location is expected to generate over a given period, expressed as a percentage of the total cash invested to open and operate it through stabilization.

Why It Matters

Return on investment ties every other financial term in this section together into a single measure of whether the deal is actually worth the capital and risk required to pursue it.

How Open Strong Evaluates It

Open Strong calculates expected annual profit at stabilized sales against total cash invested, including net buildout cost, deposit, pre-opening costs, and working capital used during ramp-up, and compares the resulting return against the Open Strong ROI benchmark.

Green

Projected return on investment is 25% or higher.

Yellow

Projected return on investment falls between 16.7% and 24.9%.

Red

Projected return on investment is below 16.7%.

Recommended Action

Calculate return on investment using total cash invested, not just buildout cost, and require at least a 25% projected return before committing capital to the deal.

Payback Period

Simple Definition

The length of time expected for a location's cumulative profit to fully recover the total cash invested to open and operate it through stabilization.

Why It Matters

Payback period captures how long capital stays at risk before it is recovered, complementing return on investment with the time dimension of the deal rather than just the percentage return.

How Open Strong Evaluates It

Open Strong calculates the number of years required for cumulative profit at stabilized performance to equal total cash invested, including net buildout cost, deposit, pre-opening costs, and working capital used during ramp-up, and compares the result against the Open Strong payback period benchmark.

Green

Payback period is 4 years or less.

Yellow

Payback period runs over 4 years through 6 years.

Red

Payback period runs over 6 years.

Recommended Action

Calculate payback period alongside return on investment using total cash invested, and treat any deal with a payback period beyond 6 years as a red flag regardless of its projected return.

Official Evaluation Rules

These principles govern how Open Strong applies the ratings above and apply across every financial evaluation.

Total occupancy cost, not base rent or the rent-to-sales ratio alone, is the primary rent-side benchmark: 10% or less of conservative projected sales is Green, above 10% but below 14% is Yellow, and 14% or higher is Red.
Projected sales must be built from comparable-unit actuals and verifiable trade-area data, using the conservative end of a reasonable range, not a landlord's, broker's, or best-case estimate.
Break-even sales must be calculated from a full cost model covering occupancy cost, labor, cost of goods, and other operating expenses, and conservative projected sales must clear break-even by a meaningful margin, not a thin one.
Buildout cost must be reviewed as an itemized budget with a contingency line and benchmarked against comparable-unit actuals, then netted against any Tenant Improvement Allowance to determine true out-of-pocket investment.
Any Tenant Improvement Allowance must be evaluated on its payout conditions, timing, and clawback terms, not on the headline dollar amount alone.
The opening budget must include net buildout cost, security deposit, pre-opening labor and training, initial inventory, licensing and permits, and a working capital reserve; a budget missing any of these categories understates true cash need.
Working capital must be sized against a realistic, comparable-unit-grounded sales ramp-up period and projected operating losses during that period, counted as part of total opening capital required, and held as a separate, protected reserve rather than commingled with other opening-budget categories or estimated as a rough percentage add-on.
Return on investment must be calculated against total cash invested, including working capital used during ramp-up: 25% or higher is Green, 16.7% to 24.9% is Yellow, and below 16.7% is Red.
Payback period must be calculated against the same total-cash-invested basis as return on investment: 4 years or less is Green, over 4 years through 6 years is Yellow, and over 6 years is Red.
All Open Strong financial-term ratings are preliminary business-risk observations, not financial, accounting, tax, or investment advice.

Open Strong Lexicon

Risk Ratings

The purpose of this lexicon is to make sure every Open Strong lesson, assessment, report, recommendation, prompt, and tool uses the same clear definitions and evaluation standards. This section covers the rating system itself, the terms used to score individual deal factors and the deal as a whole. It explains what each term means in plain language and is not legal, tax, accounting, or investment advice.

Green

Simple Definition

A rating meaning a specific factor meets or beats the Open Strong benchmark for that term and needs no special business-risk caution.

Why It Matters

Green ratings tell the user which parts of a deal are already solid, so time and negotiating leverage can focus on the factors that are not.

How Open Strong Evaluates It

Open Strong assigns Green whenever a factor's actual number or condition meets or exceeds the specific benchmark defined for that term in the Location, Lease, or Financial Terms sections of this lexicon.

Green

A factor earns Green on its own when it clears the stated benchmark for that specific term, such as total occupancy cost at 10% or less of conservative projected sales.

Yellow

A Green rating on one factor does not offset a Yellow rating on another; each factor is rated on its own facts, and the Overall Score reflects the full mix, not just the best-performing factor.

Red

A Green rating on one factor never cancels out a Red rating elsewhere in the deal; a single severe Red factor can still make the deal a Dealbreaker regardless of how many other factors are Green.

Recommended Action

Treat a Green rating as confirmation that a specific factor is solid, not as evidence the deal overall is safe, and always check it against the Overall Score before deciding.

Yellow

Simple Definition

A rating meaning a specific factor falls short of the ideal benchmark but has not crossed into an unacceptable range, and may still work depending on the rest of the deal.

Why It Matters

Yellow ratings flag the factors most likely to need negotiation, verification, or a compensating strength elsewhere in the deal before it can be approved.

How Open Strong Evaluates It

Open Strong assigns Yellow when a factor's number or condition falls in the defined middle range for that term, between the Green benchmark and the Red threshold set out in the Location, Lease, or Financial Terms sections.

Green

A single Yellow factor can still sit inside an overall Acceptable Risk deal when every other factor is Green and the Yellow factor is minor and easily addressed.

Yellow

Multiple Yellow factors across a deal compound each other and typically push the Overall Score toward Negotiable Risk rather than Acceptable Risk.

Red

A Yellow factor that cannot be improved through negotiation or verification, and that sits close to the Red threshold, should be treated with the same caution as a Red factor until confirmed otherwise.

Recommended Action

Treat every Yellow rating as an open item to negotiate, verify, or offset with a clear strength elsewhere, and do not let several Yellow ratings accumulate unaddressed.

Red

Simple Definition

A rating meaning a specific factor has crossed the threshold Open Strong treats as an unacceptable level of risk for that term.

Why It Matters

Red ratings identify the factors most likely to sink the deal on their own, regardless of how strong the rest of the deal looks.

How Open Strong Evaluates It

Open Strong assigns Red when a factor's number or condition meets or exceeds the specific unacceptable threshold defined for that term in the Location, Lease, or Financial Terms sections of this lexicon.

Green

A Red rating cannot be offset by Green ratings on other factors; the deal's Overall Score reflects the presence of the Red factor regardless of how many factors are Green.

Yellow

A Red rating combined with one or more Yellow ratings elsewhere makes the deal significantly weaker than a deal with only Yellow ratings, and should be reviewed as a likely Dealbreaker.

Red

More than one Red-rated factor in the same deal is treated as a strong signal to walk away rather than attempt to negotiate every issue at the same time.

Recommended Action

Treat any Red rating as a serious warning that requires either a clear, verifiable fix or walking away from the deal, not as one input to average against better-performing factors.

Overall Score

Simple Definition

The single combined risk read for a deal, built by weighing every individual Green, Yellow, and Red rating across the Location, Lease, and Financial Terms sections together, including any factors still marked Needs Verification.

Why It Matters

Individual factor ratings show where specific risk sits, but the Overall Score is what actually tells the user whether the deal, taken as a whole, is worth pursuing, even at an early, unverified stage of review.

How Open Strong Evaluates It

Open Strong reviews every rated factor across all three sections together, weighing the number and severity of Yellow and Red ratings, whether any single factor is severe enough to stand alone as a Dealbreaker, and whether open items remain under Needs Verification. The Overall Score may be calculated while one or more factors are still Needs Verification, but any score calculated in that state must be labeled a Preliminary Overall Score, and it cannot support Acceptable Risk or a final approval decision until every Needs Verification item is resolved.

Green

The Overall Score lands in Acceptable Risk territory when most factors are Green, any Yellow factors are minor and addressable, and no factor is Red; this territory only becomes a final Acceptable Risk determination once no factor remains Needs Verification, otherwise it is reported as a Preliminary Overall Score.

Yellow

The Overall Score lands in Negotiable Risk territory when multiple factors are Yellow, or one factor is Red but appears fixable through negotiation, and the deal is not yet ready to approve or reject; any Needs Verification items still open keep the score Preliminary regardless of how favorable the resolved factors look.

Red

The Overall Score lands in Dealbreaker territory when one or more factors are severely Red, or the combination of Yellow and Red ratings outweighs the deal's strengths beyond what negotiation can reasonably fix; a Dealbreaker-level factor controls the score even while other factors remain Needs Verification.

Recommended Action

Calculating an Overall Score with unresolved Needs Verification items is allowed, but every such score must be clearly labeled Preliminary Overall Score. Never treat a Preliminary Overall Score as Acceptable Risk and never use it as the basis for final approval or an unconditional Final Recommendation to proceed; recalculate the score as final only after every Needs Verification item has been resolved.

Dealbreaker

Simple Definition

A single factor, or combination of factors, severe enough that Open Strong treats the deal as unworkable regardless of how well other parts of the deal perform.

Why It Matters

Identifying a true Dealbreaker early prevents time, legal fees, and deposit money from being spent pursuing a deal that cannot be fixed through negotiation.

How Open Strong Evaluates It

Open Strong treats a factor as a Dealbreaker when it is rated Red at a severe level defined in the Location, Lease, or Financial Terms sections, such as total occupancy cost far above benchmark or projected sales below break-even, and confirms there is no realistic negotiation path to move it out of the Red range.

Green

No factor in the deal is rated Red, or any Red-level issue has already been resolved through documented negotiation, so no Dealbreaker exists.

Yellow

A factor is trending toward Dealbreaker territory, meaning it is Red or borderline Red, but a specific, realistic negotiation path exists to fix it before final approval.

Red

A factor is confirmed Red at a severe level with no realistic path to renegotiate it, or more than one severe Red factor exists at the same time, confirming the deal is a Dealbreaker.

Recommended Action

Identify potential Dealbreaker factors as early as possible in the review, and require a specific, documented negotiation outcome before removing that label rather than assuming the issue will resolve itself.

Needs Verification

Simple Definition

A status meaning a factor cannot yet be rated Green, Yellow, or Red because the information needed to evaluate it has not been confirmed or documented.

Why It Matters

Rating an unverified factor as Green by default understates real risk, while flagging it as Needs Verification keeps the deal from being approved on assumptions, even though an Overall Score can still be estimated on a preliminary basis while verification is pending.

How Open Strong Evaluates It

Open Strong marks a factor Needs Verification whenever the underlying number, document, or condition required by its definition in the Location, Lease, or Financial Terms sections has not been independently confirmed, such as an unverified sales estimate or an unreviewed lease clause.

Green

A factor moves out of Needs Verification into a Green, Yellow, or Red rating once the required documentation or confirmation has been obtained and reviewed.

Yellow

A factor remains Needs Verification when partial information exists but key documentation, such as actual sales history or a signed lease exhibit, is still outstanding.

Red

A factor should be treated with the same caution as Red when it is Needs Verification and the deal timeline is pushing toward a decision before verification can reasonably be completed.

Recommended Action

Never assign a Green, Yellow, or Red rating to a factor still marked Needs Verification, and do not let deal urgency substitute for confirming the underlying information; the deal's Overall Score may still be calculated as Preliminary while this factor is open, but the deal cannot be labeled Acceptable Risk or given final approval until it is resolved.

Negotiable Risk

Simple Definition

An Overall Score outcome meaning the deal has one or more Yellow or Red factors that could reasonably be resolved through renegotiation, additional documentation, or deal restructuring before it becomes acceptable.

Why It Matters

Labeling a deal Negotiable Risk instead of approving or rejecting it outright keeps the door open to fix specific, identified problems rather than accepting unnecessary risk or walking away from a workable deal too early.

How Open Strong Evaluates It

Open Strong assigns Negotiable Risk when the Overall Score reflects factors that are Yellow or Red but tied to specific, addressable issues, such as an above-benchmark occupancy cost that could be reduced through rent negotiation or a Tenant Improvement Allowance adjustment.

Green

A deal moves from Negotiable Risk to Acceptable Risk once the specific factors driving the Yellow or Red ratings are renegotiated or resolved and re-rated accordingly, and no factor remains Needs Verification.

Yellow

A deal stays in Negotiable Risk while specific negotiation points remain open and unresolved, with a clear list of what must change before the deal can be approved.

Red

A deal moves from Negotiable Risk to Dealbreaker when negotiation attempts fail, the landlord or seller will not move on the identified issues, or new information reveals the problem is more severe than first rated.

Recommended Action

Treat a Negotiable Risk deal as a specific to-do list of renegotiation points, not a green light to proceed, and re-run the Overall Score once negotiations conclude.

Acceptable Risk

Simple Definition

An Overall Score outcome meaning the deal's business risks, as evaluated through Open Strong's factor ratings, are strong enough, individually and combined, to move forward on that basis. It does not mean no further professional review is needed; any factor separately flagged Professional Review Required must still be routed to a qualified professional regardless of the Acceptable Risk label.

Why It Matters

This is the standard that confirms a deal's business risk, as Open Strong evaluates it, is ready to move toward signing, distinguishing it clearly from deals that still need negotiation or verification. It is a business-risk conclusion only, so it cannot be read as clearing a deal's legal, tax, or accounting review.

How Open Strong Evaluates It

Open Strong assigns Acceptable Risk only when every factor across the Location, Lease, and Financial Terms sections is either Green or a minor, addressable Yellow, no factor is Red, and no open items remain under Needs Verification. Assigning Acceptable Risk says nothing about whether any factor is also flagged Professional Review Required; that flag stands on its own and must still be cleared by a qualified professional.

Green

The deal qualifies as Acceptable Risk when the great majority of factors are Green and any remaining Yellow factors are minor, well understood, and do not require further negotiation; if any factor also carries a Professional Review Required flag, that review is still required before signing even though the deal is Acceptable Risk.

Yellow

A deal should not be labeled Acceptable Risk if a Yellow factor, though individually minor, remains unverified or is stacked with several other Yellow factors across different sections.

Red

A deal cannot be labeled Acceptable Risk if any single factor is rated Red, regardless of how strong the rest of the deal is.

Recommended Action

Reserve the Acceptable Risk label for deals that have cleared verification and negotiation on the business-risk factors, but treat it strictly as that: a business-risk conclusion, not a substitute for completing any outstanding Professional Review Required items, which must still be routed to a qualified professional before signing.

Professional Review Required

Simple Definition

An additional status attached to a factor's underlying Green, Yellow, or Red rating, not a separate or replacement rating, meaning that factor also involves legal, tax, accounting, or other licensed professional judgment that falls outside what Open Strong's business-risk ratings are designed to evaluate.

Why It Matters

Open Strong's ratings are business-risk observations, not legal, tax, accounting, or investment advice, and some deal terms genuinely require a licensed professional's judgment in addition to, not instead of, their underlying Green, Yellow, or Red rating.

How Open Strong Evaluates It

Open Strong flags Professional Review Required alongside a factor's underlying Green, Yellow, or Red rating whenever that factor involves binding legal language, tax treatment, entity structuring, licensing or regulatory compliance, or other matters that require a qualified attorney, accountant, or other licensed professional in addition to the business-risk rating.

Green

A factor rated Green can still carry a Professional Review Required flag; the Green rating covers only the business-risk dimension of that factor and does not clear the separate professional-review need.

Yellow

A factor rated Yellow that also carries a Professional Review Required flag has two open items to track independently: negotiating or verifying the business-risk factor, and routing its legal, tax, or accounting dimension to a qualified professional.

Red

A factor rated Red keeps the full weight of that Red rating even if it also carries a Professional Review Required flag; the professional review addresses the legal or tax dimension only and does not soften or replace the underlying Red severity.

Recommended Action

Track Professional Review Required as an additional flag layered on top of a factor's underlying Green, Yellow, or Red rating, never as a substitute rating in its own right, and route every flagged factor to a qualified attorney, accountant, or other licensed professional before finalizing the deal.

Final Recommendation

Simple Definition

Open Strong's summary conclusion on a specific deal, combining the Overall Score, any Dealbreaker factors, outstanding Needs Verification items, and any Professional Review Required flags into one clear next step.

Why It Matters

A Final Recommendation translates every individual rating and the Overall Score into a single, actionable conclusion, so the user knows exactly what to do next rather than having to interpret a list of factor ratings on their own, even while some items are still open.

How Open Strong Evaluates It

Open Strong can build a Final Recommendation once every factor across the Location, Lease, and Financial Terms sections has been rated, even if verification, negotiation, or professional review items remain open; in that state the recommendation is conditional and must list exactly what remains open. Only a Final Recommendation to proceed requires every Needs Verification item to be resolved, every negotiation point closed, and every Professional Review Required flag cleared, with the Overall Score final rather than Preliminary.

Green

A Final Recommendation to proceed is given only when the Overall Score is final (not Preliminary) and Acceptable Risk, no Dealbreaker factor exists, and no unresolved Needs Verification or Professional Review Required items remain outstanding.

Yellow

A conditional Final Recommendation to proceed is given when the Overall Score is Negotiable Risk, or when verification, negotiation, or professional review items remain open, listing the exact renegotiation points, verifications, or professional reviews that must be completed before it can become unconditional.

Red

A Final Recommendation to walk away is given when the Overall Score is Dealbreaker, or when a severe Red factor has no realistic path to resolution regardless of how the rest of the deal performs.

Recommended Action

Treat any conditional Final Recommendation as conditional on the facts available at the time it was made, and require a new review any time a material fact changes, such as a renegotiated rent figure or a newly verified sales number; reserve an unconditional Final Recommendation to proceed for the point when every verification, negotiation, and professional review item has been resolved.

Official Evaluation Rules

These principles govern how Open Strong applies the ratings above and apply across every risk evaluation.

A single severe Red rating on any factor can make a deal a Dealbreaker regardless of how many other factors are rated Green, and Green ratings on other factors never offset a Red rating.
The Overall Score may be calculated even while one or more factors remain Needs Verification, but any score calculated in that state must be labeled a Preliminary Overall Score.
A factor with unconfirmed information must be marked Needs Verification rather than defaulted to Green, and no deal may be labeled Acceptable Risk, nor given final approval, while a Needs Verification item remains outstanding.
Negotiable Risk is reserved for deals where the specific factors driving Yellow or Red ratings have a realistic, identifiable path to resolution through renegotiation or restructuring.
Acceptable Risk requires every factor to be Green or minor Yellow, no Red factors, and no outstanding Needs Verification items; it is a conclusion about business risk only and does not mean no further professional review is needed.
Professional Review Required is an additional status attached to a factor's underlying Green, Yellow, or Red rating, never a replacement for that rating, and any factor involving legal, tax, accounting, licensing, or regulatory judgment must carry it and be routed to a qualified professional.
The Final Recommendation must reflect the Overall Score, any Dealbreaker factors, outstanding Needs Verification items, and any Professional Review Required flags together, not the Overall Score in isolation.
All Open Strong risk ratings, including the Overall Score and Final Recommendation, are business-risk observations, not legal, tax, accounting, or investment advice.
A conditional Final Recommendation may be issued while verification, negotiation, or professional review items remain open, provided it lists those items as conditions; only a Final Recommendation to proceed unconditionally requires every such item to be resolved and the Overall Score to be final rather than Preliminary.

Open Strong Lexicon

Recommendations

The purpose of this lexicon is to make sure every Open Strong lesson, assessment, report, recommendation, prompt, and tool uses the same clear definitions and evaluation standards. This section covers the action-oriented recommendation terms Open Strong uses to translate the Green, Yellow, and Red ratings defined in the Risk Ratings section into a clear next step. It explains what each term means in plain language and is not legal, tax, accounting, or investment advice.

Proceed

Simple Definition

Open Strong's recommendation to move forward with signing the deal as currently structured, with no outstanding negotiation, verification, or professional review items.

Why It Matters

Proceed is the clearest signal Open Strong gives, telling the user the deal is ready to sign rather than still needing more work.

How Open Strong Evaluates It

Open Strong issues Proceed only when the Overall Score is a final, not Preliminary, Acceptable Risk, no factor is a Dealbreaker, and no Needs Verification or Professional Review Required items remain open.

Green

Proceed is the correct recommendation when every factor is Green or minor Yellow, the Overall Score is Acceptable Risk, and no open items remain.

Yellow

Proceed should not be issued while any factor remains Yellow and unresolved, or while the Overall Score is still Negotiable Risk; Proceed with Conditions or Renegotiate applies instead.

Red

Proceed must never be issued if any factor is rated Red or the deal is a Dealbreaker, regardless of how strong the rest of the deal looks.

Recommended Action

Reserve Proceed for deals that have fully cleared verification, negotiation, and professional review, and reassess this recommendation if any material fact changes before signing.

Proceed with Conditions

Simple Definition

A recommendation to move forward only if specific, named conditions are met before or at signing, such as a lease amendment or a landlord concession.

Why It Matters

This recommendation lets a workable deal advance without treating remaining issues as resolved, keeping the outstanding conditions explicit and trackable.

How Open Strong Evaluates It

Open Strong issues Proceed with Conditions when the Overall Score is Acceptable Risk or Negotiable Risk with a clear, realistic path to close the remaining gap, and lists each condition by name. Each condition must be fully completed, or included in the final signed documents, before the tenant becomes bound; the deal is not treated as unconditionally proceeding until then.

Green

Applies when most factors are Green and the remaining Yellow factors have a specific, named fix that is realistic to obtain before signing.

Yellow

If a listed condition is not completed and not included in the final signed documents before the tenant becomes bound, the recommendation reverts to Renegotiate or Verify Before Proceeding rather than becoming an unconditional Proceed.

Red

Proceed with Conditions is not appropriate when a Red factor or Dealbreaker is present; that situation calls for Pause the Deal or Walk Away instead.

Recommended Action

List every condition explicitly, and confirm each one is either fully completed or included in the final signed documents before the tenant becomes bound; never treat a partially satisfied condition as fully met.

Renegotiate

Simple Definition

A recommendation to return to the landlord, seller, or other counterparty to change specific deal terms before the deal can move forward.

Why It Matters

This recommendation turns a Yellow or fixable Red factor into a concrete action, rather than leaving the user unsure what to do about it.

How Open Strong Evaluates It

Open Strong issues Renegotiate when the Overall Score is Negotiable Risk and specific factors have a realistic, identifiable path to improvement through negotiation.

Green

Renegotiate resolves into Proceed or Proceed with Conditions once the targeted terms are successfully changed and re-rated Green or acceptable Yellow.

Yellow

Renegotiate is the standard recommendation while one or more Yellow or fixable Red factors remain open with a specific, named ask.

Red

If negotiation attempts fail on a severe Red factor, Renegotiate should be replaced with Pause the Deal or Walk Away rather than repeated indefinitely.

Recommended Action

Name the exact terms to renegotiate and the target outcome for each, and set a clear point at which failed negotiation triggers Walk Away instead.

Verify Before Proceeding

Simple Definition

A recommendation to obtain and confirm specific missing information or documentation before any further decision is made.

Why It Matters

This recommendation prevents a deal from being approved on assumptions when one or more factors are still marked Needs Verification.

How Open Strong Evaluates It

Open Strong issues Verify Before Proceeding whenever any factor remains Needs Verification, regardless of how favorable the resolved factors look, keeping the Overall Score at most Preliminary.

Green

Once the outstanding information is confirmed and the factor is re-rated Green, this recommendation can give way to Proceed if no other items remain open.

Yellow

This recommendation stays in place as long as any factor is Needs Verification, even if the Preliminary Overall Score looks favorable.

Red

If verification reveals a factor is actually Red, the recommendation shifts immediately to Renegotiate, Pause the Deal, or Walk Away as appropriate.

Recommended Action

List exactly what documentation or confirmation is missing, and do not allow deal urgency to substitute for completing verification.

Professional Review Required

Simple Definition

A recommendation directing the user to route a specific factor to a qualified attorney, accountant, or other licensed professional before the deal can be finalized.

Why It Matters

Open Strong's ratings are business-risk observations, not legal, tax, accounting, or investment advice, so some factors require licensed professional judgment before signing.

How Open Strong Evaluates It

Open Strong issues this recommendation whenever a factor carries the Professional Review Required flag, independent of whether that factor's underlying rating is Green, Yellow, or Red.

Green

A Green-rated factor with this flag can still require professional review; the business-risk rating does not clear the separate professional-review need.

Yellow

A Yellow-rated factor with this flag has two open items to track: negotiating or verifying the business-risk factor, and completing the professional review.

Red

A Red-rated factor with this flag keeps its full Red severity; the professional review addresses only the legal, tax, or accounting dimension.

Recommended Action

Route every flagged factor to a qualified professional and treat their findings as a separate, required input alongside the business-risk rating.

Pause the Deal

Simple Definition

A recommendation to stop active pursuit of the deal temporarily while a specific, serious issue is investigated or resolved, without yet walking away.

Why It Matters

Pausing protects the user from rushing into a signature or forfeiting a deposit while a major open question is still unresolved.

How Open Strong Evaluates It

Open Strong issues Pause the Deal when a factor is trending toward Dealbreaker, a Red rating has appeared with an unclear negotiation path, or a Professional Review Required item raises a serious concern.

Green

The deal can resume moving toward Proceed or Proceed with Conditions once the issue causing the pause is resolved and the affected factor is re-rated.

Yellow

Pause the Deal is appropriate while the severity of a Yellow or borderline Red factor is still being assessed and a quick resolution is not yet clear.

Red

If the issue causing the pause is confirmed severe and unresolvable, the recommendation should move to Walk Away rather than remain paused indefinitely.

Recommended Action

Set a clear reason and timeline for the pause, and revisit the deal on a specific date rather than letting it stall indefinitely.

Walk Away

Simple Definition

A recommendation not to proceed with the deal because the Overall Score is a Dealbreaker or a severe Red factor has no realistic path to resolution.

Why It Matters

This recommendation protects the user from signing a deal whose risks outweigh any realistic negotiation or verification fix.

How Open Strong Evaluates It

Open Strong issues Walk Away when the Overall Score is Dealbreaker, when negotiation on a severe Red factor has failed, or when more than one severe Red factor is present at the same time.

Green

Walk Away is not appropriate if all factors are Green or minor Yellow; that situation calls for Proceed or Proceed with Conditions instead.

Yellow

Walk Away is premature while a Yellow or borderline Red factor still has an untried, realistic negotiation path; Renegotiate should be attempted first.

Red

Walk Away is the correct recommendation once a severe Red factor is confirmed with no realistic fix, or negotiation on it has already failed.

Recommended Action

Document the specific factor or factors driving the Walk Away recommendation so the reasoning is clear if a similar deal is reviewed later.

Monitor After Opening

Simple Definition

A recommendation to keep tracking a specific factor after the location has opened and is operating, because its risk was acceptable at signing but depends on real-world performance.

Why It Matters

Some risks, such as actual sales performance against projections, cannot be fully confirmed until after the business is open and operating.

How Open Strong Evaluates It

Open Strong issues Monitor After Opening when a factor was rated Green or acceptable Yellow at signing based on projected rather than actual figures, such as projected sales or projected occupancy cost.

Green

The monitored factor stays Green once actual post-opening results confirm or exceed the figures used at signing.

Yellow

The monitored factor should be re-rated Yellow if early actual results run behind the projections used to approve the deal, triggering a closer follow-up review.

Red

The monitored factor should be re-rated Red, and Reassess After Changes applied, if actual results fall far enough behind projections that the original Green or Yellow rating no longer holds.

Recommended Action

Name the specific metric to monitor, such as actual monthly sales, and set a review checkpoint, such as 90 days after opening, to compare actual results against the original projection.

Reassess After Changes

Simple Definition

A recommendation to re-run the affected ratings and Overall Score whenever a material fact in the deal changes after the original review.

Why It Matters

A rating or recommendation is only as accurate as the facts it was based on, so a material change, such as a renegotiated rent figure, can make the original conclusion outdated.

How Open Strong Evaluates It

Open Strong issues Reassess After Changes whenever a factor's underlying number or condition changes after its original rating, such as a newly verified sales figure, a renegotiated lease term, or a landlord concession.

Green

Once the changed factor is re-rated and confirmed Green or acceptable Yellow, the Overall Score and Final Recommendation can be recalculated and may return to Proceed.

Yellow

A change that moves a factor toward Yellow should trigger Renegotiate or Verify Before Proceeding again on that specific factor rather than assuming the original approval still applies.

Red

A change that moves a factor to Red should immediately trigger Pause the Deal or Walk Away, replacing any prior Proceed recommendation until reassessed.

Recommended Action

Treat every conditional or final recommendation as tied to the facts known at the time it was made, and re-run the affected ratings any time a material fact changes.

Final Action Plan

Simple Definition

The complete, itemized list of every next step required before a deal can close, combining all open Renegotiate, Verify Before Proceeding, and Professional Review Required items into one document.

Why It Matters

Bringing every outstanding item into a single plan prevents any one negotiation point, verification task, or professional review from being missed before signing.

How Open Strong Evaluates It

Open Strong builds a Final Action Plan alongside the Final Recommendation, listing each open item by factor, the specific action needed, who is responsible, and the target date for resolution.

Green

The Final Action Plan is Green, and the deal is ready for an unconditional Proceed, only once every listed item is resolved, no factor is rated Red, no factor or the deal overall is a Dealbreaker, and the Overall Score is recalculated as a final Acceptable Risk.

Yellow

The Final Action Plan remains open, and Proceed with Conditions rather than Proceed applies, while any listed item, such as a pending lease amendment, is still outstanding.

Red

If an item on the Final Action Plan cannot be resolved, such as a failed renegotiation on a severe Red factor, the plan should be closed out with a Walk Away recommendation instead.

Recommended Action

Keep the Final Action Plan as a single, itemized document with an owner and date for each item, and update the Final Recommendation as each item is resolved or fails to resolve.

Official Evaluation Rules

These principles govern how Open Strong applies the recommendations above and apply across every deal review.

Proceed is reserved for a final, not Preliminary, Acceptable Risk Overall Score with no Dealbreaker and no outstanding Needs Verification or Professional Review Required items.
Proceed with Conditions must name every outstanding condition explicitly, and each condition must be fully completed or included in the final signed documents before the tenant becomes bound in order to be treated as met.
Renegotiate and Verify Before Proceeding must name the specific factor and the specific action needed, rather than issuing a general instruction to keep working the deal.
Professional Review Required is an action layered on top of a factor's Green, Yellow, or Red rating, never a substitute for it, and applies regardless of that underlying rating.
Walk Away is reserved for a Dealbreaker Overall Score or a severe Red factor with no realistic negotiation path; it should not be issued while an untried, realistic negotiation path remains.
Monitor After Opening applies only to factors rated on projected rather than actual figures, and must be re-rated against real results once they are available.
Reassess After Changes applies any time a material fact changes after the original rating, and supersedes any prior recommendation until the affected factor is re-rated.
The Final Action Plan is Green, and unconditional Proceed applies, only once every item is resolved, no factor is Red, no Dealbreaker is present, and the Overall Score is a final Acceptable Risk; it must combine every open item across Renegotiate, Verify Before Proceeding, and Professional Review Required into one itemized document with an owner and date for each.
All Open Strong recommendations are business-risk conclusions, not legal, tax, accounting, or investment advice.