Make Tenant Report Gross Sales Data with Spreadsheet Software

Like most percentage rent leases, your lease probably requires each tenant to give you annual gross sales reports so you can determine how much percentage rent the tenant owes. Typically, a tenant submits its gross sales reports on paper. But sifting through these paper reports can be time-consuming. Plus, it can be tough to spot the information you're looking for.

Orlando attorney Stephen W. Snively suggests a better way to review a tenant's gross sales reports: Require the tenant to report its gross sales by using spreadsheet software and then sending the information to you either by e-mail or on a disk. Gross sales information that's in a computerized spreadsheet format is easier and faster to access and analyze than gross sales reports on paper, he says. We'll tell you how to get this right in the lease. And we give you a Model Lease Clause, at right, that you can adapt and use in your lease for this purpose.

Cover Five Points in Your Lease

Make sure that your lease clause, like our Model Lease Clause, covers these five points, Snively advises:

* Your Right to Require Computerized Spreadsheet

Say in the lease that you've got the right, at any time during the lease, to require the tenant to give you its gross sales reports on a computerized spreadsheet, says Snively [Clause, par. a]. This way, you're not forcing the tenant to give you computerized spreadsheets. You're simply saying that you have the right to require them. You may be perfectly content right now with getting your tenants' gross sales reports on paper only, Snively says. But later on, you may change your mind and decide you'd rather have computerized spreadsheets.

* Your Right to Determine Spreadsheet's Organization

Give yourself the right in the lease to determine how the spreadsheet data should be organized, and what data should be included—that is, both the format and content, including what the column and row headings should say, says Snively [Clause, par. c]. This way, the data will be presented in a way that's easy for you to review and analyze, he explains.

* Acceptable Spreadsheet Software

It's a good idea to spell out which spreadsheet software programs you want the tenant to use, says Snively. Give the brand name, he adds. That way, you can make sure the tenant doesn't use a software program that's unreliable or incompatible with your computer system, he explains. Also, give yourself the right to ask for another computer software program that you didn't specify in the lease, he adds [Clause, par. a]. The software program you name in a lease you sign today may no longer be acceptable to you—or available—at gross sales reporting time. Or a better software program might become available in the future, he adds.

Practical Pointer: A savvy tenant may want to make sure you plan to be reasonable when and if you ask it to use another computer software program, says Snively. By “reasonable,” the tenant may mean that it wants the lease to say that there's a limit on how much the program can cost, and that you won't require the tenant to use brand new programs that are tough to find. You may have to give in on this point, Snively advises.

* Computerized and Paper Copies of Spreadsheet

In addition to giving you its gross sales reports on computerized spreadsheets, make the tenant give you a copy of each spreadsheet on paper, suggests Snively [Clause, par. b]. This way, if your computer system can't access the computerized spreadsheet files for some reason, you've still got the paper copy to review, he says.

Practical Pointer: You might want to require the tenant to certify that the paper copies are correct, says Snively.

* Tenant Pays Costs

Make sure the tenant is required to pay all of the costs it incurs to prepare and submit each gross sales report on a computerized spreadsheet—including the cost of the computer software and any costs incurred in making paper copies of the spreadsheet, says Snively [Clause, par. a & b]. Otherwise, the tenant may try to shift these costs to you by saying that since you required the tenant to use the software and submit paper copies, you should have to pay for these things.

CLLI Source

Stephen W. Snively, Esq.: Partner, Holland & Knight LLP, 200 South Orange Ave., Ste. 2600, Orlando, FL 32801; (407) 425-8500; SSnively@HKLAW.com.