A kick-out clause is a lease provision that grants the tenant the right to terminate the lease early if sales revenue fails to reach a specified threshold within a defined measurement period. It functions as a performance-based exit right, allowing a retailer to exit an underperforming location without paying the balance of rent owed for the remaining lease term.
By Angel Campa, Founder · Updated March 2026
For retailers entering new markets or untested locations, kick-out clauses limit downside exposure to one to three years of rent rather than the full 10-year lease term. A well-negotiated kick-out clause at a $200,000-per-year location effectively caps the tenant's maximum loss at $400,000–$600,000 versus $2 million over the full term. Landlords dislike kick-out clauses because they introduce uncertainty into long-term cash flow projections and can complicate lender underwriting of permanent financing.
Set the sales threshold at a level that reflects realistic minimum performance rather than an aspirational target — typically 75%–85% of projected first-year sales. Include a lookback period long enough to capture full seasonal cycles (24–36 months is standard) and require that the measurement period exclude any partial years affected by build-out, grand opening, or force majeure events. Negotiate a simple termination notice mechanism (e.g., 90-day written notice) rather than a cumbersome audit-based process that can delay the exit.
Sales-based kick-out rights (most common in retail), co-tenancy-triggered termination rights that function similarly to kick-out clauses, landlord kick-out rights in some leases that allow the landlord to recapture space if the landlord receives a bona fide offer from a higher-paying tenant, and mutual kick-out rights exercisable by either party.
Lextract extracts these fields directly from your lease PDF when this clause is present:
Co-Tenancy Clause
A co-tenancy clause is a lease provision — almost exclusively found in retail leases — that gives a tenant the right to pay reduced rent or terminate the lease if certain anchor tenants or a minimum occupancy threshold in the shopping center falls below a specified level.
Go-Dark Clause
A go-dark clause gives a tenant the contractual right to stop operating its business and cease all commercial activity at the leased premises while continuing to pay rent, without being in default of the lease.
A kick-out clause activates when the tenant's gross sales revenue fails to reach a specified threshold within a defined measurement period — typically 24 to 36 months. The threshold is usually set at 75% to 85% of projected first-year sales. When triggered, the tenant can terminate the lease by providing written notice (typically 90 days) without paying the remaining rent obligation for the balance of the lease term.
Tenants should set the sales threshold at a level reflecting realistic minimum performance, not aspirational targets. A common approach is 75% to 85% of projected first-year gross sales, measured over a full 24- to 36-month lookback period that captures complete seasonal cycles. Exclude partial years affected by build-out, grand opening promotions, or force majeure events from the measurement period. Require a simple termination mechanism (90-day written notice) rather than a complex audit-based process.
A kick-out clause at a $200,000-per-year location with a 2-year measurement period effectively caps the tenant's maximum loss at $400,000 versus $2 million over the full 10-year lease term — an 80% reduction in worst-case financial exposure. Without a kick-out clause, a tenant locked into a long-term lease at an underperforming location must either continue paying full rent, negotiate an early termination payment, or find a subtenant willing to take the space at a potential loss.
A practical 15-point checklist covering every major negotiation lever in a commercial lease — from base rent and TI to CAM caps, renewal options, and exit rights.
Lease renewal is your best negotiating opportunity as a tenant. Learn when to start, what to ask for, and how to use market data to lower your rent and improve terms.
A commercial lease is a legally binding contract between a landlord and a business tenant. Learn the key terms, lease types, and critical clauses before you sign.
Need CAM recovery under your brand?
CAMAudit gives firms white-label CAM recovery infrastructure while they keep the client relationship and deliver branded reports.
Explore the partner program →Upload your lease PDF and Lextract extracts 126 structured fields with confidence scoring and red flag detection — automatically. Just $15 per lease.
Upload Your Lease