Turnover rent
What it means
In many retail and food-court locations, the lease charges turnover rent: a percentage of your sales, often on top of a fixed base rent. As your sales rise, so does your rent, which caps the upside of a strong site.
For franchisees, turnover rent interacts with royalties and marketing levies, all charged on sales, so a high-turnover-rent site can leave a thin margin even at good sales volumes.
In practice
When modelling a centre-based franchise, add turnover rent to the royalty and levy to see your true percentage-of-sales cost. A site can look busy and still be marginal once all sales-based costs stack up.
A real example
A food-court franchisee pays a base rent plus 8% turnover rent; combined with a 6% royalty and 2% levy, 16% of every sales dollar leaves before other costs, which reshapes her break-even.
Turnover rent, FAQs
What is turnover rent in a franchise lease?
Rent charged as a percentage of your sales, common in shopping centres, often on top of a base rent. It rises with your turnover.
Why does turnover rent matter for franchisees?
It stacks with royalty and marketing levy, which are also percentages of sales, so a high-turnover-rent site can be marginal even at strong sales. Model all sales-based costs together.
See the full franchise glossary, the Fee Index or our buyer guides.