Question

A company in raleigh leased a building so that it could build an escape room experience. After operating for two years, attendance (and thus its profits) started to drop significantly, so it decided to close the location. when the workers started taking down the installation, they realized that some of the structures would damage the walls if they were to try to remove them. What is true about these trade fixtures?

Answer 1

Trade fixtures that cause significant damage upon removal may convert to the landlord's property, posing a challenge similar to what European theatres faced. Business decisions about operational continuity involves an understanding of fixed and variable costs.

Step-by-step explanation:

The trade fixtures installed by the escape room company in Raleigh are likely considered tenant's fixtures and may be removed by the tenant. However, if removal would cause significant damage to the property, they become landlord's fixtures, and cannot be removed without potentially owing damages for the repairs.

Similar issues have occurred with theatre booths in Europe where renovations could not proceed without the consent of booth owners. In business decisions regarding fixed and variable costs, it's critical to understand when to continue operations or shut down to minimize losses, as with the scenarios provided about the Yoga Center.