Get Percentage Rent on Revenue from Arcade Machines

If your retail tenants install arcade machines in their spaces to attract customers and boost revenue, chances are you're not collecting all the percentage rent you're entitled to. Many retail tenants install assorted arcade machines—such as video game machines, virtual reality computer games, and pinball machines—in their spaces. These arcade machines (whether coin-, computer-, or credit-card operated) provide entertainment to customers and children who want a break from shopping. But your tenants may be excluding arcade machine revenue from their percentage rent calculation, simply because the definition of “gross sales” in the lease's percentage rent clause doesn't specifically mention arcade machine revenue.

Although each sale through an arcade machine may generate only a small amount of revenue, the revenue from many sales can really add up—as can the percentage rent you're losing. You could always take the tenant to court to challenge the tenant for excluding the revenue, but that would mean investing a lot of time and money. A better idea is to add language to the lease that helps you avoid the dispute in the first place while getting all of the percentage rent that you're entitled to.