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The clause lets someone leave if sales miss a test. The test is a number on the page. You’re sitting at the table, lease spread out, pen hovering over the margin where you scribbled a question mark next to the kick-out clause line last week. You trace the printed sales threshold with your index finger, double-checking that the number matches the rough projections you jotted on a scrap of receipt tucked in the lease folder.
What This Commercial Lease Page Details About The Kick-Out Clause
You parse each term to avoid misinterpretation later, starting with who holds the kick-out right. This page states the right is tenant-only, meaning your landlord cannot terminate your lease early if you exceed the sales test, only you can walk away if you miss it two reporting periods in a row. The sales test is measured on a rolling 12-month cycle, so every month you will tally the prior 12 months of gross sales, minus any returns, shipping costs, and wholesale bulk discounts you extend to business clients, per the definition of gross sales laid out earlier in the lease. You have 15 days after the end of each monthly measurement period to submit a signed sales report to your landlord, and if you fall short of the threshold for two consecutive months, you can submit your 30-day termination notice any time in the 20 days following the second shortfall report submission. The page also notes that you cannot exercise the kick-out clause in the first 18 months of your lease term, to give you enough time to build a customer base and stabilize your revenue before the test applies. You mark that grace period in yellow highlighter, as that timeline aligns with your planned ramp-up for this new location, when you will be investing heavily in marketing and staff training before you hit steady sales volumes.
How Your Forecasted Revenue Compares To The Stated Sales Test
You pull up your latest revenue projections on your laptop, cross-referencing the numbers with the test threshold printed on the lease page to see how much breathing room you have if sales underperform. Illustrative example: The test threshold printed on this page is $475,000, so any rolling 12-month total below that number counts as a miss for the reporting period. You map out four common performance scenarios to evaluate how the clause would apply to each, compiling them into a quick reference table for your upcoming negotiation call with your landlord:
| Scenario | Rolling 12-Month Forecasted Sales | Meets Sales Test Requirement | Next Steps For You |
|---|---|---|---|
| Conservative baseline forecast | $490,000 | Yes | Track sales monthly to stay aligned with projections, no immediate need to renegotiate the threshold |
| Moderate forecast (10% underperformance from baseline) | $441,000 | No | Document all external factors contributing to underperformance, prepare to submit termination notice if the shortfall repeats |
| Aggressive forecast (15% overperformance from baseline) | $563,500 | Yes | Consider adding a mutual kick-out clause addendum if you want the option to expand to a larger space early without penalty |
| Worst-case economic downturn forecast (25% underperformance from baseline) | $367,500 | No | Confirm the clause’s notice period timeline, line up alternative lower-cost space options in case you need to exercise the right |
You cross-reference these projections with historical sales data from your first location, noting that the conservative baseline is only 3% above the test threshold, so you may want to negotiate a 10% lower threshold to give yourself more breathing room during slow seasonal periods. You note that the worst-case scenario puts you well below the threshold, so the clause gives you a critical safety net if market conditions shift unexpectedly after you sign the lease. You also flag that the aggressive forecast puts you in a position where you may outgrow the 1,200 square foot space before your 5-year lease term ends, so adding a mutual kick-out provision would let you leave early without paying a termination fee if you hit 150% of the sales test for two consecutive periods, a change you will propose to your landlord this week.
When You Return To This Lease Page To Finalize Your Negotiations
When you stand up from the table now, you tuck this lease page into a manila envelope with your marked-up notes and the projection table you just drafted, and leave it on the corner of your desk where you keep all active transaction documents. You schedule a 30-minute call with your landlord for two days from now, and set a reminder to pull this page out 10 minutes before the call to review your talking points. When you open this page again, you will first confirm that any negotiated changes to the sales test threshold are printed clearly in the clause, with all parties initialing next to the change to avoid disputes later. You will cross-check the measurement period timeline to make sure the 18-month grace period before the test applies is explicitly stated, and that the definition of gross sales aligns with the accounting practices you use for your business. You will also add a note to the margin confirming that you can exercise the kick-out clause without forfeiting your security deposit, as long as you meet the notice requirement and leave the space in acceptable condition. If you agree to add a mutual kick-out right for the landlord, you will make sure that the landlord can only exercise the right if you exceed the sales test by 120% for two consecutive periods, so you don’t risk being evicted right as your business is growing. You will also confirm that the clause does not require you to provide any additional documentation beyond your regular monthly sales reports to exercise the right, so you don’t have to jump through extra administrative hoops if you need to terminate the lease early. You will cross-reference the clause with the security deposit section of the lease to make sure there is no language that allows the landlord to withhold your deposit for exercising the kick-out right, as long as you adhere to all move-out requirements laid out elsewhere in the document. Once all changes are negotiated and marked on the page, you will attach the addendum outlining all revised terms to the rest of the lease document, and keep a scanned copy in your cloud storage as well as a physical copy in your office file cabinet. You can upload the scanned final copy to Lease Jacket to store alongside all your other commercial property documentation for easy access later. Once all signatures are collected, you will revisit this page once a quarter during your regular business financial reviews to compare your actual sales against the threshold, so you always know if you are eligible to exercise the clause if your business needs change.