In the event of a lockdown, retailers have stated that they will only pay rent in proportion to their actual business.

The top retailers and restaurant chains such as Reliance Retail, Madura Fashion & Lifestyle, Domino, Plum by Bent Chair, Mamagoto, Farzi Café, Lee, Wrangler & Cafe Warehouse, etc., insist on introduction of clauses in all new leases, which state that in the event of government-mandated closures of stores and business, they do not pay rent or pay only according to their actual businesses.

“We indicated in all new leases that we would not pay a rental in the future as long as lock-down is enforced. We had force majeure clauses in certain lease agreements prior to the pandemic as well, but they were few and restricted to 90 days,” said Priyank Sukhija, promoter of First Fiddle F&B, which operates Lord of the Drinks, Plum by Bent Chair, and Tamasha. The new clause is a result of Covid-19 and is quickly becoming the norm in rental agreements. If landlords or mall operators disagree, distributors will not renew their leases and leave the property. In certain situations, while some mall owners accept the new rules, this leads to acrimony.

“This (lockdown provision) is a requirement we are putting up in all of the new leases we are signing,” said Kabir Suri, joint managing director of Azure Hospitality, which manages the Mamagoto and Foxtrot restaurant brands. He stated that his business has abandoned locations where landlords did not give help or changes based on lockdowns and closures in response to government instructions. “We are also considering it with new landlords,” said Nitin Chhabra, CEO of Ace Turtle, the master franchisee of Lee and Wrangler in India.

“Pandemic clauses would be included in all new leases,” said Zorawar Kalra, managing director of Massive Restaurants and promoter of Made in Punjab, Farzi Cafe, Masala Bar, and Bo-Tai.

According to a senior executive at Jubilant FoodWorks, which operates Domino’s Pizza, Dunkin Donuts, and other chains, the company is currently negotiating for dozens of properties in various cities and is negotiating to pay “proportionate” rentals of actual sales during the months of government-imposed lockdowns. Many smaller landlords, he claims, are hesitant to agree to such stipulations.

According to executives with first-hand knowledge, the country’s largest retailer, Reliance Retail, plans to include similar terms in future leasing agreements. “Most of the previous leases did not state that closures would occur as a result of government directives. Tenants are now including this clause,” said Shriram Monga, principal consultant at SRED Advisory, a retail real estate firm located in New Delhi.

“They insist on clauses like government directives being included in lease contracts, as well as terminologies like pandemic and epidemic,” Monga added.

Retailers and restaurants have suffered a big blow as a result of last year’s countrywide lockdown and this year’s local lockdowns, with shops closing, significant losses, and retrenchments.