Concessionaire agreement is a license given by a party to another party to use an area for a specific period and purpose for a consideration fee known as concessionaire fee. Concessionaire agreement is popular in a department store or supermarket. A new brand chooses concessionaire agreement to test out the market feed back on their brand instead of renting a premise. While an established brand try to penetrate into another prominent place to market their product. Both new and existing brands are choosing concessionaire agreement to save cost of operation, rental and surveillance. Types of business that usually adopt concessionaire agreement are food and beverage and ready made products.
Contents in a Concessionaire Agreement
Generally, a concessionaire agreement shall include the duration of the concession, concessions space, location, type of business/services, responsibility for stock replacement/ preparation of food, display and advertising, insurance, indemnity, data protection, employment and staff, termination, commission payment, targeted sale, type of equipment, Business Hour and etc.
Negotiable Terms
Concessionaire agreement is meant to be more flexible compare to a lease/ tenancy agreement. A few terms shall be negotiable with the owner of the department store. For instance, a fixed concessionaire fee or percentage fee on the actual sale. Duration of the agreement could be between a few months to a few years. The existing equipment, fit-out, kitchen, fixture and fitting, POS system and etc could be made available to the concessionaire. Monthly targeting sale maybe another challenging terms, however both parties could negotiate to waive on first few month targeting sale.
Stamp Duty on Concessionaire Agreement
Concessionaire agreement like any other agreement, stamp duty is payable on the agreement.
Disadvantage of Concessionaire Agreement
Some concessionaires have to reveal their monthly sale profit to the owner of the department store in order to determine the monthly percentage rent. Most of the time, online sale is listed as one of the sale earn. Besides that, you do not own the area hence you are required to leave or relocate in the event owner of the premises withdraw such license. The concessionaire may have limited space and area for its business, expending own store and storage places are always challenging. In order to resolve the disadvantage of a concessionaire agreement, both the department store owner and the concessionaire shall negotiate for a better arrangement.
Tips for entering a concessionaire agreement
You have to be sure on your duty as a concessionaire, you shall seek the explanation and clarification of the department store before committing into any arrangement. Secondly, you shall negotiate and take note on the changes on rules and regulation in a mall which may affect your business. Also, watch out on the complaint made by any party and ensure rectification work and improvement were conducted. You are to be sure that what type of data and information are required to reveal but not all about your business. Last but not least, you shall always seek legal advise when you are in doubt.
