The incomes of other occupants of their unit are a particular problem that tenants face. A number of standard turnover leases allow for “double counting” since the tenant, if he can share the job with dealers or franchisees, the turnover achieved by that other occupant is considered by the tenant as a turnover in the calculation of the rent of the turnover. In addition, the rent paid by the tenant is taken into account. These provisions are intended to encourage tenants to submit the turnover certificate before the delivery time expires. With modern accounting systems, it should be easy for most tenants to submit turnover certificates within one month of the end of the billing period, although some tenants try to negotiate longer periods. One of the perceived advantages of sales leases is that they foster a sense of partnership between the landlord and the tenant. The above proposals and recommendations cannot be imposed on the tenant, but must be negotiated. The approach should not be to penalize the tenant (note that any attempt to impose a fine is in any case considered invalid), but rather to encourage the tenant to run his page of the good deal, namely to provide the lessor with accurate information on the turnover so that the rent can be calculated. When things go wrong, communication is the key.
A bipartisan dialogue between landlords and tenants is essential to negotiate a solution that ultimately benefits all parties. While the current climate is changing the landscape, owners may express a little hesitation when signing a turnover lease in the first place. Retailers should therefore go back to their business plan and evaluate what they will offer in return to an owner. For example, agreeing to a slightly longer lease would give the owner more security. Alternatively, the distributor could promise an adjustment at its own expense. Depending on the market and the state of the economy, tenants may find that they have more influence in the design of these types of agreements. There are advantages to promoting a stronger partnership between landlords and tenants using turnover rents, but all parties need to be aware of some of the substantive issues that need to be addressed.