Short Answer
A revenue-share lease should say this mathematically, not leave the answer to labels such as “minimum rent,” “base rent” or “turnover rent.”
Two common structures produce very different payments:
Base-plus-turnover:
fixed base rent + an agreed percentage of turnover.
Minimum-guarantee structure:
the tenant pays the higher of a fixed minimum amount or the agreed percentage of turnover.
If the lease uses the same percentage and the same fixed figure but does not state which formula applies, the parties can reach materially different rent calculations from the same sales data.
The safest drafting states the formula, payment timing, advance amounts, reconciliation method and worked examples in one place—and then uses that model consistently throughout the lease.
Why This Matters
Revenue-linked rent can protect the landlord’s downside while sharing in tenant performance.
But:
“There is a minimum rent, plus 10% of sales.”
can mean either fixed rent plus 10%, or 10% subject to a fixed floor. Those models can materially change occupancy cost and investment return.
Select the economic model first, then make every payment clause follow it.
Typical Scenario
A landlord and business operator agree a fixed monthly amount and a percentage of revenue.
The heads of terms call the fixed amount a “minimum guarantee,” while another clause says turnover rent is “payable in addition to” monthly rent.
Finance asks:
“Do we add both amounts, or does the percentage replace the minimum once it is higher?”
If the contract does not answer that question immediately, the formula is not finished.
Practical Analysis
01Write the formula before writing the prose.
Start with the commercial equation.
For example:
Model A: THB X + Y% of Turnover
Model B: greater of THB X and Y% of Turnover.
Then translate that equation into the agreement rather than inheriting ambiguous template wording.
02Define the revenue base precisely.
“Turnover,” “Gross Revenue” or “Sales” should identify what is included and excluded.
Address VAT, service charge, discounts, refunds, complimentary items, delivery sales, events, room packages and landlord-collected sales.
A clear percentage applied to an unclear revenue base is still unclear.
03Separate advance payment from final liability.
A monthly fixed payment may be:
- final base rent;
- an advance against turnover rent; or
- a minimum payment subject to later reconciliation.
State which.
Otherwise, one party may treat the fixed payment as additional rent while the other treats it as a credit against the percentage calculation.
04Set the reconciliation cycle.
If turnover can only be known after month-end, specify when the tenant reports sales, when the landlord can verify them and when any top-up becomes payable.
For annual minimums, state when any shortfall is tested.
05Align every schedule and payment clause.
The commercial schedule, definitions, invoicing clause, audit provision and worked example should all use the same formula.
One correct schedule can still be undermined by inconsistent wording elsewhere.
06Use worked examples.
Show at least a low-sales and high-sales month.
For a minimum-guarantee model, one example should show the fixed minimum applying and another should show turnover rent exceeding it.
Worked examples are especially useful where several entities collect sales.
07Remember that Thai courts interpret substance, not isolated labels.
Civil and Commercial Code section 368 requires contracts to be interpreted in good faith with regard to ordinary usage. Thai Supreme Court decisions likewise look at the agreement and parties’ real intention rather than a label alone.
Internal consistency matters more than the label “minimum rent.”
What We Usually Look At
We review the term sheet, rent definition, revenue definition, sales channels, collection flow, advance-payment language, reconciliation period, audit rights, VAT and invoicing mechanics, worked examples and every schedule that repeats the commercial formula.
Common Traps
Typical mistakes are using “minimum guarantee” and “base rent” interchangeably, saying “plus” in one clause and “higher of” in another, failing to credit advances, leaving room-package revenue unresolved and changing the formula in a schedule without updating the body.
Practical Next Step
Put the deal into one line before signing:
Rent payable = [formula]
Then test it against three sales levels and make Finance calculate the result independently. If Legal and Finance get different answers, the clause is not ready.
Legal Sources
- Civil and Commercial Code, section 368, on interpretation of contracts according to good faith and ordinary usage.
- Civil and Commercial Code, section 537, defining hire of property where the arrangement is legally a lease.
- Supreme Court Judgment No. 5678/2545, applying sections 171 and 368 and emphasising the parties’ true intention and commercial usage when interpreting contractual obligations.
- Supreme Court Judgment No. 3945/2533, treating the substance of consideration and the parties’ actual bargain as relevant rather than relying only on the description used in the lease documentation.
General legal information only. Please seek advice on your specific facts. Laws and regulatory practice may change.