04/17/2026
If you're signing a percentage rent lease in Calgary, this post could save you thousands. 👇
Percentage rent leases require gross sales reporting — and the definition of "gross sales" is where landlords and tenants fight the most.
The standard lease language says: "Gross sales means all revenue from or arising out of the premises." Sounds simple. It isn't.
Common disputes include:
❓ Do online sales count?
❓ What about delivery fees?
❓ Gift card sales — at purchase or redemption?
❓ Returns and discounts?
❓ Credit card processing fees?
❓ Sales tax?
Here's exactly what to negotiate before you sign:
1. Precise Definition 📋
Gross sales = retail sales of merchandise from the premises for cash or credit, excluding returns, online orders fulfilled from other locations, delivery fees, sales tax, and gift card sales until redeemed.
2. Excluded Revenue Sources 🚫
Wholesale, catering, third-party delivery commissions, and sale of fixtures or equipment should all be excluded.
3. Deductible Fees 💳
Credit card processing fees should be deducted from gross sales. This is negotiable — get it in writing.
4. Reporting Timeline 📅
Monthly sales reports due 30 days after month-end. Annual certification due 90 days after year-end.
5. Audit Rights 🔍
Landlord audits once annually, at landlord's expense — unless the audit reveals underreporting exceeding 3%.
6. Underreporting Penalty ⚠️
Shortfall plus interest at 6%, not 18%. That distinction matters enormously if a dispute arises.
The most important thing to remember: most penalties come from unclear definitions, not fraud. Get it right upfront and protect yourself.
Questions about your commercial lease in Calgary? Drop them below or send me a DM. 📩
