Avoid Disputes over Meaning of 'Specialize' in a Certain Cuisine

You may be negotiating a lease with a restaurant tenant that wants to be the only restaurant at your center to “specialize” in a certain type of cuisine'such as seafood. And it may demand that you agree in the lease not to rent space to any other tenant that specializes in that cuisine. But if you're forced to give in to this demand, you may be setting the stage for a dispute with the tenant, warns Boston attorney Richard Heller.

The term “specialize” is so vague that you and the tenant may not agree about its meaning, says Heller. You may think that specializing in a cuisine means that a certain percentage of the tenant's menu items must be in that cuisine. But the tenant could argue'and a court could agree'that it means something else. For example, the tenant may argue that a tenant specializes in a cuisine if a set percentage of its gross sales come from food sales in that cuisine.

Add Definition Based on Entree Items

To prevent disputes with a tenant over the meaning of “specialize” in a cuisine, Heller suggests that you define it in your lease. A practical definition is that a tenant must have more than a set percentage'for example, 50 percent'of its entree items (including menu items and specials off the menu) in that cuisine at any time.

For this definition, add the following language to your lease:

Model Lease Language

Landlord agrees that subsequent to the date of the execution of this Lease, Landlord will not enter into a lease of space in the Shopping Center to any tenant or occupant that specializes in [insert type of cuisine, e.g., seafood]. For purposes of this Paragraph “specializes in [insert type of cuisine, e.g., seafood]” shall mean that more than 50 percent of the entree items at any time (including menu items and off-menu specials) with respect to any meal are [insert type of food, e.g., seafood items].

Practical Pointer:

Don't use gross sales figures relating to food sales in a cuisine as the basis for defining specialization in a cuisine. Food sales are much harder to monitor than entree items. Plus, you might find yourself having to crack down on another tenant that has healthy gross sales'—just because that other tenant has a few successful menu items in a particular cuisine.

Insider Source

Richard Heller, Esq.: Of Counsel, Kushner Sanders Ravinal LLP, 20 William St., Ste. 115, Wellesley, MA 02481; (781) 418-5100; rheller@ksrlawfirm.com.