- Retail Leasing: Can The Landlord Force Your Store to Open on Thanksgiving?
- December 10, 2014
- Law Firm: Kohrman Jackson Krantz PLL - Cleveland Office
With the Thanksgiving holiday only a few days away, we’ve been hearing news stories about which stores will open on Thanksgiving Day and which will remain closed. Every year there seems to be contest as to which stores can get the earliest jump on the shopping frenzy known as “Black Friday,” while others take the opposite approach and refuse to open on Thanksgiving Day, considering it to be a day best spent at home with one’s family. I happen to subscribe to the latter view. However, one’s personal preference doesn’t always dictate a retail store’s hours of operation.
A standard clause in retail leases deals with the hours the store is expected to be open for business. Typically, it is the landlord who dictates what those store hours will be. In some leases, the days of the week and the hours a store is open each day are negotiated in great detail. Below are three sample lease provisions regarding store hours, starting with a very detailed provision and ending with a very simple provision, all of which keep the landlord primarily in control when it comes to dictating a store’s hours of operation.
“Tenant shall cause its business to be conducted and operated in good faith and in such manner as shall assure the transaction of a maximum volume of business in and at the Premises. Unless other hours are designated or approved by Landlord in writing, Tenant shall cause the Premises to be open from 11:00 a.m. until 10:00 p.m. Sunday through Thursday and from 11:00 a.m. until 11:00 p.m. on Friday and Saturday. The Shopping Center shall be closed for business on Thanksgiving Day and Christmas Day. Landlord, in its sole discretion, shall have the right to reduce or eliminate operating hours on any or all of New Year’s Eve, New Year’s Day, Easter Sunday, Thanksgiving Eve, Christmas Eve, Labor Day, Memorial Day, and the Fourth of July. Tenant agrees that during each Rental Year, from Thanksgiving Day through December 31 and on at least five (5) additional days, Landlord shall be permitted to extend Tenant’s operating hours up to an additional three (3) hours per day. If Tenant shall fail to operate during all such hours, in addition to constituting an Event of Default hereunder, Tenant shall be required to pay, for each hour that Tenant shall fail to be open, liquidated damages equal to the greater of Fifty and 00/100 Dollars ($50.00) or ten percent (10%) of Tenant’s average hourly Gross Sales computed for the month immediately preceding the month in question. If Tenant shall request Landlord’s approval of the opening of the Premises for business for periods exceeding those specified above and Landlord shall approve such request, which approval may be granted or withheld in Landlord’s sole discretion, Tenant shall pay for any additional costs incurred by Landlord in connection with Tenant’s opening the Premises for business during such additional hours, including but not limited to, any additional amounts of Landlord’s Operating Costs, additional costs of heating, ventilating and air-conditioning the Common Areas and the Premises, and additional utilities furnished to the Premises by Landlord.” [emphasis added]
This first provision has been more heavily negotiated and provides the tenant with a little more flexibility, but not much.
“Daily, except for Sunday, the Premises shall be open for business to the public not later than 10:00 A.M., and on Sunday the Premises shall be open for business not later than Noon. The Premises shall remain open for the conduct of business to the public until at least 9:00 P.M. on Monday through Wednesday, 10:00 P.M. Thursday through Saturday, and 6:00 P.M. on Sunday. In addition, the Premises shall be open for business on such legal holidays and for such hours as may become the standard as reasonably established by Landlord.” [emphasis added]
The last sentence of Sample 2 is the slippery slope that can trip up a retail tenant who desires to remain closed on a traditional holiday when the standard starts to change. As more and more stores elect to start “Black Friday” shopping hours on Thanksgiving evening or even earlier, a landlord may reasonably argue there is a new standard and it expects all the retail tenants to conform.
“Tenant will keep the Leased Premises open for business during hours designated by Landlord, from time to time, as the Shopping Center’s hours of operation.”
This last sample, while simpler, gives the landlord total control over what the retail tenant’s hours of operation will be.
Retail tenants need to be aware of the store hours required in their leases and the level of discretion afforded to the landlord to change those hours. As more and more retail establishments push the envelope on opening during major holidays, the remaining tenant may find themselves forced to go along regardless of their personal beliefs and preferences, or risk being in breach of their lease and/or subject to substantial financial penalties.