1. Understanding the Two Models
🔹 Minimum Guarantee (MG)
A fixed, upfront rent commitment, paid regardless of performance.
It protects landlords financially and creates predictable income.
Used when:
- The brand is established
- Footfall and performance outlook are strong
- The space is in a prime location
- You need rent certainty (budgeting, KPIs, NOI)
🔹 Revenue Share
A percentage of gross sales, paid only when the tenant performs.
Used when:
- You want to attract emerging brands
- You need flexibility to fill a vacancy fast
- The concept is seasonal or experiential
- You want an alignment of interests: “we succeed together”
2. The Pros & Cons
✔️ Benefits of a Minimum Guarantee
- Predictable revenue
- Less administrative monitoring
- Stronger commitment from the tenant
- Better for high-demand spaces
❗ Limits
- Can deter new or smaller brands
- Risk of overpricing → vacancy
- Not ideal for categories with uncertain ROI
✔️ Benefits of Revenue Share
- Low barrier to entry for tenants
- Fills space quickly
- Encourages brand performance
- Great for testing new concepts
❗ Limits
- Income uncertainty
- Requires sales tracking infrastructure
- Potential for underreporting
- Can reduce NOI in slower periods
3. Hybrid Model: The Best of Both Worlds
The most common—and efficient—structure in 2025 is a hybrid model: MG + Revenue Share.
How it works:
You set a Minimum Guarantee, and if the % of sales exceeds that amount, the landlord receives the higher of the two.
This gives you:
- A secure baseline
- Potential upside
- A fair deal for both sides
Typical structure:
- MG + 10–25% of gross sales
- MG prorated monthly
- Sales reporting weekly or monthly
How it works: You set a Minimum Guarantee, and if the % of sales exceeds that amount, the landlord receives the higher of the two.
4. How to Choose the Right Structure (Decision Matrix)
| Situation | Best Option | Why |
|---|
| Vacancy needs filling fast | Revenue Share | Low barrier, faster activation |
| High-traffic prime unit | MG | Maximize income; low risk |
| New brand / unproven concept | Rev Share or Hybrid | Shared risk; growth potential |
| Seasonal event (Xmas, Summer, Ramadan) | Hybrid | Predictability + performance upside |
| Large-format experiential | Revenue Share | Volatile but scalable activity |
| Strong brand requesting testing period | Hybrid | Commitment + flexibility |
5. The Key Question: What Are You Optimizing For?
- Stability? → MG
- Occupancy? → Revenue Share
- Long-term partnerships? → Hybrid
- Innovation and brand curation? → Revenue Share
- NOI Growth? → Hybrid or MG
- Data acquisition? → Revenue Share (you learn the true performance potential)
Your KPI determines the deal.
6. Practical Tips for Negotiating Better Deals
For MG Deals
- Benchmark similar centers and categories
- Provide marketing support to justify the price
- Include a sales reporting clause—even if rent isn’t tied to performance
For Revenue Share Deals
- Ensure clear, transparent sales reporting
- Use POS integration when possible
- Set caps on discounts or returns
- Require a minimum operational schedule
For Hybrid Deals
- Set an MG that covers your minimum operating expectations
- Offer incentives for multi-unit activations
- Review performance monthly and adjust if needed
7. Real Market Trend: Flexibility Wins
Shopping centers in 2025 are driven by agility:
- More short-term activations
- More emerging brands
- More seasonal flows
- Stronger focus on experience over long-term rent
This means Revenue Share is no longer just a discount model—it’s a strategic tool for growth.
But the best operators know something else:
🔸 Data + Hybrid deals consistently produce the healthiest leasing mix.
Final Takeaway
There is no universal “best” model.
The smartest landlords use all three—MG, Revenue Share, and Hybrid—depending on context, category, and brand.
In specialty leasing, the goal is simple:
👉 Maximize revenue while maximizing activation.
Choosing the right structure helps you do both—and creates a win-win partnership between you and your tenants.
The Impact of Skincare Business Consulting Services
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