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.
Recapture Clause
A recapture clause gives the landlord the right to take back — recapture — the leased premises when the tenant requests consent to assign the lease or sublet the space.
Continuous Operation Clause
A continuous operation clause requires the tenant to keep the leased premises open and actively conducting business during all required business hours throughout the lease term.
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