Percentage rent requires the tenant to pay a percentage of gross sales exceeding a defined threshold. Disputes involve the definition of gross sales, exclusions, reporting accuracy, and diversion of sales to other locations.
Audit rights permit landlord verification.
Alternative Names:
Percentage Rent|Overage Rent Dispute
Why it Matters?
Online and omnichannel sales attribution has become the central dispute, since leases drafted before e-commerce did not address whether sales ordered online and picked up in store count toward the breakpoint. Retailers structuring transactions to route revenue away from the leased location face diversion claims. Updating gross sales definitions to address fulfillment channels is what prevents the dispute in current leasing.
Frequently Confused with
Related terms
Frequently asked questions
What is the central modern dispute?
What supports a diversion claim?
