Should online returns processed at my store count as gross sales for percentage rent?

Only if your lease's gross sales definition explicitly includes them. Legacy retail leases, written before the omnichannel era, typically define gross sales as transactions initiated at the store location. Online returns processed in-store are arguably a reversal of an online transaction, not a new in-store sale. This is an active area of lease interpretation dispute.

Can I exclude employee discounts from my gross sales figure for percentage rent?

Most standard gross sales definitions allow tenants to deduct employee discounts from the gross sales figure used for percentage rent calculation. Review your lease's gross sales definition for permitted exclusions. Common exclusions include returns, sales tax, employee discounts, and delivery charges.

Should online returns processed at my store count as gross sales for percentage rent?

Only if your lease's gross sales definition explicitly includes them. Legacy retail leases, written before the omnichannel era, typically define gross sales as transactions initiated at the store location. Online returns processed in-store are arguably a reversal of an online transaction, not a new in-store sale. This is an active area of lease interpretation dispute.

Can I exclude employee discounts from my gross sales figure for percentage rent?

Most standard gross sales definitions allow tenants to deduct employee discounts from the gross sales figure used for percentage rent calculation. Review your lease's gross sales definition for permitted exclusions. Common exclusions include returns, sales tax, employee discounts, and delivery charges.

CAM Audit for Apparel Stores

Fashion and apparel retailers operating in malls and lifestyle centers under percentage rent structures. Disputes over gross sales definitions, particularly online returns and employee discounts, are the most common CAM-adjacent issue for apparel tenants. Annual CAM exposure for this tenant type ranges up to $10,000–$30,000. CamAudit runs 12 forensic detection rules specific to your lease structure in under five minutes.

Typical Lease Structure

Percentage Rent or NNN/Percentage Hybrid

Avg. Locations

10–200+

Annual CAM Exposure

$10,000–$30,000

Lease Structure

Percentage Rent or NNN/Percentage Hybrid, tenant pays base rent plus a percentage of gross sales above the natural or artificial breakpoint. Mall marketing fund assessments are a separate but related cost.

CAM Vulnerabilities for Apparel Stores

Landlords calculate percentage rent on gross sales figures that include online returns processed in-store, employee discounts, and sales tax. Marketing fund dues are assessed without clear lease authorization. Pro-rata share denominator excludes anchor tenants, increasing the inline tenant's share.

Most Common Overcharges

1Percentage rent calculated on gross sales including online returns processed in-store
2Employee discounts and sales tax included in gross sales for percentage rent calculation
3Marketing fund dues assessed without express lease authorization
4Pro-rata share denominator excludes anchor tenant space, inflating small tenant share
5Management fee applied to gross CAM pool including non-controllable expenses

Watch For This Trigger

Landlord demands percentage rent payment on online returns processed in-store, citing the store's role as the point of transaction even though the original sale occurred online.

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Precedent & Case Context

Simon Property Group tenants have successfully challenged percentage rent calculations that included online order returns processed in-store, arguing that the gross sales definition in legacy leases was not intended to capture omnichannel transactions originating outside the physical store.

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Other Tenant Types

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Related Resources

ResourcesLease Types and CAM Structures ToolsFree CAM Audit Tools ToolsPro-Rata Share Calculator GlossaryCAM Glossary

Frequently asked questions

This page provides general educational information. It is not legal advice and may not reflect the most current law in your state. Consult a licensed attorney for advice specific to your situation.