Anyone who works with retail leases knows that leases are not all the same, and the parties cannot assume that cookie cutter language will meet all needs. However, if you work with leases in unusual locations, such as a theme park, the differences are even more significant and the impact on profitability can be staggering.

It is not uncommon for theme park owners to lease out retail space in their parks pursuant to leases or concession agreements. Theme park visitors view retailers and vendors selling goods and services within a theme park (particularly retailers with outdoor carts and merchandising) as being associated with the theme park owner. Because the key demographic for theme parks is kids and families, park owners are concerned about damaging their brand with retail merchandise that is of poor quality or of questionable nature. Therefore, theme park leases often include narrowly tailored use provisions, such as restrictions on the types and quality of products that can be sold, and limitations on the sale of alcohol, which are strictly enforced. In addition, theme park leases and concession agreements typically include specific remedies that the theme park can invoke to prevent and mitigate against any damages caused by a breach – or potential breach – of use restrictions, without having to resort to formal litigation.

Further, with respect to theme park retail leases and concession agreements, there is an inherent conflict between the business purposes driving the retailer and theme park owner when negotiating the rights and conditions for the length of the term and right to relocate the retail space. Unlike many venues, theme park owners desire the contractual right to relocate retailers and vendors because they often move rides, attractions and other concessions around or in and out of the theme park to keep the park “fresh” for the public. In contrast, retailers and vendors want to ensure they are located where they believe their business will do best, whether in high profile gate areas, near popular rides or adjacent to complimentary retailers. Additionally, theme parks want to maximize their flexibility to eliminate those retail operations that are not profitable, become obsolete or stale, or are otherwise inconsistent with new park “themeing”. Therefore, the theme park owner wants complete control over who is operating in its theme park, and there are generally strict prohibitions on assignment or subletting, which are usually non-negotiable. This can lead to a lease term that is far shorter than what is found in a more typical retail lease, and far greater flexibility for the theme park owner to relocate its tenants.

Finally, for many theme parks, the business is seasonal, compressing a year’s worth of operating costs and revenues into a few months. As such, a retailer must be prepared for rent provisions designed to maximize revenues or profits during the operating season of the park. Among those provisions are continuous operation provisions that require the retailer to be open during park operating hours, which may not be typical shopping center hours. Additionally, the basis for calculating percentage or revenue-based rent is typically a far greater proportion of rent than at other more standard venues.