Turnover rent is often assessed as an amount on top of the base rent. Once the store’s sales reach the turnover threshold in a particular period, a fixed percentage will then be applied to the revenue. This gives the landlord security. It ensures that the tenant will pay a certain base rent, plus a higher amount if the store does well.
However, this imposes extra administration on both the tenant and landlord. The tenant will need to audit and report on their turnover. The landlord will need to audit the reports. That said, turnover rent is still useful as it can adjust the rent to market conditions.
Answered by Kristine Biason
Kristine is a lawyer and is part of LegalVision’s franchise team. She assists franchisee and franchisor clients throughout their entire business journey; from drafting agreements to providing advice on business structuring, licensing, leasing, employment law and international expansion. She is regularly involved in negotiating agreements, and providing commercial advice when it comes to litigation.
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