Exclusive use of a shop - what it means

Waiter standing outside of cafe next to sandwich board

Exclusive use gives the tenant the right to be the only retailer of a certain type of goods or services in a multi-outlet centre or building.

The lease and the lessor’s disclosure statement specify the permitted use of the premises and whether that permitted use (or specific menu item/s or service) is exclusive to the tenant.

For the tenant, exclusive use gives the advantage of being the only retailer of what they sell and means that they don’t have to compete with similar shops in the same centre.

For the landlord, permitted use and exclusive use help to ensure a well-balanced mix of retailers in the centre.

Permitted use and exclusive use are closely connected and must be clearly defined to reduce the risk of future infringement.

The landlord and tenant can negotiate a lease clause that describes the permitted use in a way that balances their different interests.

If the tenant wants the right to exclusive use, they may also negotiate a clause on the types of exclusive use they have. For example, the permitted use may be to sell handbags and the exclusive use is to sell high-end designer handbags.

The landlord must ensure that permitted uses for future tenants don’t infringe on the exclusive use rights of existing tenants.