Leasing space in a shopping mall is entirely different from leasing street frontage: a foreign brand buys not just area but footfall, an operating system and a position in a planned tenant mix. In return, the mall cost structure is far more complex — fixed rent, service charges, a marketing fund and, in many leases, percentage rent on revenue. This article unpacks the cost layers and the accompanying control clauses a brand must negotiate.
1. The full cost structure of a mall unit
Four cost layers are usual: (1) fixed rent per m²/month — sometimes on an annually escalating ladder; (2) the mall’s service/management charge covering common-area operations, central cooling, security, cleaning and lifts — charged per m² and adjusted cyclically like rent; (3) the marketing fund: a contribution per m² or as a percentage of revenue for the centre’s joint promotion programmes — the brand should require fund-use reports and a voice in the marketing plan; (4) usage-based costs: separately metered electricity (usually at the mall’s retail electricity price, above the state tariff), water, after-hours cooling and staff parking. When comparing malls, total occupancy cost over projected revenue is the deciding metric — a centre with lower rent but a higher total-cost-to-revenue ratio is still the more expensive choice.
2. Percentage rent (revenue sharing): mechanism and negotiation points
The revenue-sharing (percentage rent) model is common for fashion, cosmetics and F&B in malls: the tenant pays a minimum fixed rent plus a percentage of revenue above a breakpoint, or the higher of fixed rent and a revenue percentage (in negotiation practice, percentages run by category — fashion and F&B in major centres typically sit from single digits to low double digits of revenue). Points to lock in the contract: the definition of “revenue” for the percentage — gross in-store revenue before or after discounts, whether online sales collected in store (click & collect) and delivery-app orders count, treatment of returns and value added tax (percentage computed on tax-exclusive revenue); the reconciliation period and whether the breakpoint is natural or artificial; a percentage cap in peak seasons; and the settlement and invoicing mechanism for this variable rent. The most common real-world dispute is omnichannel revenue — leases signed before e-commerce grew strong are usually silent here, so negotiate the supplement at signing/renewal.
3. The mall owner’s sales-audit rights and protecting brand data
With percentage rent comes the mall owner’s right to verify sales: connecting the store’s POS system to the centre’s system, periodic revenue reports, audit rights over the unit’s books and sales invoices, and sanctions for understating revenue (usually back-payment, penalties and a termination right). The brand should balance with reasonable limits: audit scope confined to revenue data of that unit (not expanding into personal customer data — personal data is protected under Vietnam’s personal data protection law, and sharing customer data with the landlord beyond rent computation is its own compliance risk); advance notice of audits; confidentiality of the brand’s sales data (the landlord simultaneously lets to competitors in the same centre — leaked category sales are real commercial harm); and use of only aggregated, anonymised revenue data for the centre’s market reports.
4. Category exclusivity, co-tenancy and other operating clauses
Three clause groups decide the long-term value of a mall position. First, category exclusivity: the brand asks the centre not to lease to direct same-segment competitors within a defined area of the centre during the term — in return the centre usually demands a minimum-revenue commitment or a right to withdraw exclusivity if sales fall below a threshold. Second, co-tenancy: if an anchor tenant leaves or the centre’s occupancy drops below a threshold, the tenant gets rent relief or a termination right — insurance against a centre slowly “dying”. Third, operating discipline: mandatory opening hours matching the centre’s hours (breaches are fined), display and signage standards under centre rules, a rent-free fit-out period, and the centre’s relocation clause — this must be limited to an equivalent position with the centre bearing relocation costs, or the brand can be pushed off the prime position it invested in building recognition at.
Frequently asked questions
Is percentage rent subject to value added tax invoicing?
Yes. All rent — both the fixed part and the revenue-variable part — is the mall owner’s real-estate leasing/service revenue and bears value added tax as prescribed; the variable part is settled per sales-reconciliation period with corresponding adjustment invoices. The parties should align the settlement period with tax declaration periods.
The mall owner demands a direct POS connection — can the brand refuse?
This is a contract clause, not a statutory duty: where rent has a revenue component, a POS connection or sales-reporting requirement is a reasonable verification mechanism and hard to refuse entirely; the balanced solution is accepting connection at daily aggregated sales-data level, with confidentiality clauses and purpose-limitation on data use, instead of opening full transaction-level data.
Is the mall marketing fund mandatory, and what is it used for?
The marketing fund is a contract term — nearly every major mall mandates it in the standard lease. The fund pays for the centre’s joint promotion (events, seasonal decoration, footfall-driving communications). The brand should require a transparency mechanism: an annual fund-use plan, settlement reports and tenant representation on the centre’s marketing advisory board.
The mall is gradually losing footfall — how does the brand exit?
If the lease has a co-tenancy clause or occupancy/anchor commitments, the brand uses those very clauses to obtain relief or terminate. If it does not, the only exits are commercial negotiation (rent reduction in exchange for extension, or area contraction) — which is why the co-tenancy clause must be negotiated at signing, when the centre most wants foreign brands to polish its tenant mix.
This article has been quality-reviewed by the FLAW AI Legal Council
