Keeping Competitors Out of Your Retail Space

Most stores that lease space in a mall or other commercial area would like a guarantee that the landlord won’t also rent to a competing business.  This guarantee is known as “exclusive use,” and you can negotiate for it in a lease. If you’re negotiating a right to exclusive use, here are 5 main points to consider:

1.         What’s your use? What happens if you re-focus your business and your use changes? Can you still keep out competitors?

2.         What if you sublet some space or assign the lease – does the exclusive use still apply?

3.         If you temporarily fall behind on the rent, do you lose your right to exclusive use?

4.         What about pre-existing tenants? 

5.         What’s your remedy? If the landlord violates the contract and leases space to a competitor, what can you do? Presumably you can sue in court to make the landlord stop, but can you also withhold rent, or terminate the lease? If so, do you first have to prove that you actually suffered financial harm?