Glossary

Kick-Out Clause

Updated June 2026

A kick-out clause — also called a recapture clause or a termination-for-low-sales clause — lets a party end the lease early if a location's sales fail to clear a stated hurdle by a set measurement date. It ties the right to occupy the space to actual performance, and it turns the location's sales numbers into a deadline that someone has to watch.

How a kick-out clause works

The clause names two things: a sales hurdle and a measurement date. A common shape is a target like 2 million dollars in gross annual sales, measured at the end of the third lease year. If sales come in below the hurdle, the party holding the right gets a window — often 30 to 90 days — to exercise it.

The clause can run in either direction. A landlord recapture lets the landlord take back an underperforming space and re-tenant it with someone stronger. A tenant exit right lets the operator walk away from a location that never found its market, instead of carrying it for the full term. Some leases grant both sides a right at the same measurement date.

Why it matters for multi-location operators

A kick-out clause depends on reported sales, which connects it directly to your sales reporting and, often, to percentage rent — the same numbers feed both. The difference is direction: percentage rent costs you more when a store does well, while a kick-out clause is the lever that lets you leave a store that does not.

That exit right is only valuable if you act inside the window. The measurement date passes quietly — nothing happens on it except that the right to leave, or the landlord's right to recapture, becomes live for a short period and then closes. For a single store that is easy to remember. Across a portfolio, every location with a kick-out has its own hurdle, its own measurement date, and its own window, and the underperforming stores are exactly the ones worth tracking closely.

Treating each kick-out as a tracked lease obligation — with the sales hurdle, the measurement date, and the exercise window on a deadline with an owner — is what keeps a usable exit right from expiring unused. The same discipline applies to your exclusive-use clause and other rights that turn on a date.

Nova Foundry tracks kick-out hurdles, measurement dates, and exercise windows across every location, so a sales shortfall surfaces as an actionable right instead of a missed one.