Nancy operates a retail clothing store in a suburban strip mall. When negotiating her original lease, we spent a lot of time negotiating a very thorny provision called the “exclusive use” clause.
Basically, the clause ensures that the tenant is the only tenant in the shopping center or building that can sell particular products or services. Although it’s usually the larger tenants that insist on it, it’s the smaller businesses that could really use this kind of protection.
The clause is hard to negotiate because it must clarify what the remedies would be if the exclusivity is breached. In Nancy’s case, we negotiated that her rent would be abated until the violation is remedied and that she could terminate the lease if it was not remedied within three months.
This kind of provision is not easy to get, but it’s very valuable.
If you just found a great new office space, how would you feel if a competitor moved in across the hall? Consider an exclusive use clause to maximize the value of an expensive office space.