Supermarket Use and Exclusive Clauses
186 Pages Posted: 5 Oct 2005
Although you can find it just about everywhere, the twenty-first century supermarket is hard to define. Consumers have no need to define them They tend to visit these huge and efficient emporia weekly or more often, and they know they can buy what they need there. That's all they need to know. Transactional lawyers who specialize in lease negotiations can't think of the supermarket solely as a place where they can buy food and other things. Defining the supermarket and distinguishing supermarkets from other kinds of stores that do business in shopping centers are essential skills for them. To a large degree, a shopping center's success depends on the diversity of its tenant-mix. Consumers are drawn to shopping centers that offer a wide variety of merchandise, and shopping centers that can't do that are left behind in this competitive world. That's why shopping center landlords and tenants alike favor contractual arrangements to assure tenant mix diversity. We find these contractual arrangements in leases in the form of clauses called use clauses that regulate the business conducted in the leased stores and exclusive clauses that regulate the business conducted in the other stores of the shopping center. A use clause might prohibit the tenant from conducting any business in its leased premises other than a supermarket, and an exclusive clause might prohibit the landlord from leasing any other space in the shopping center to a competing supermarket.
It follows then that a lease negotiator must understand what a supermarket is - especially if he or she proposes or accepts a use clause limiting the use of a store to a supermarket or an exclusive prohibiting other stores from being used a supermarket. Only uncertainty, disappointment, and bitter litigation can result from a failure to understand just what kind of a store a supermarket is.
This article, the first in a series of five articles, defines the supermarket by exploring the industry's historic roots. It reviews the innovative business plan conceived by the industry's founding father. It illustrates how the founding father's plan was modified by feisty entrepreneurs who followed in his footsteps and added their own improvements to the institution destined to completely revamp the world's food distribution system.
Keywords: Lease, Supermarket, Use Clause, Exclusive Clause, Restriction, Commercial Lease, Shopping Center Lease, Transactional Law, Tenant Mix
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