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Kiosk Licenses — Open Air Freedom?

The proliferation of kiosks and carts at major shopping centers across America creates opportunities and risks for retailers looking to secure valuable space at affordable rates. The open air, temporary and mobile nature of kiosks and carts presents unique issues not found in traditional in-line or stand-alone lease arrangements. The following are a few issues to consider when negotiating kiosk and cart license agreements.

Lease vs. License. Most kiosks are licensed rather than leased and, depending on the jurisdiction, this distinction can have significant consequences for retailers. Generally, licenses do not grant an "estate" in the premises and therefore are not subject to typical landlord/tenant laws that govern eviction, bankruptcy, eminent domain proceedings and other issues in traditional real estate leases. Consequently, the legal rights of a licensee are far more limited than those of a similarly situated tenant in a lease context. For example, a kiosk license may not survive a shopping center bankruptcy or similar reorganization. Unfortunately for unsuspecting licensees and licensors, referring to an agreement as a license or lease does not necessarily make it so. In fact, courts routinely look beyond the heading of an agreement to determine whether the parties have entered into a real estate lease or a license agreement. Careful consideration should be given to whether the parties desire or intend to create a lease or license and the rights associated with each type of arrangement.

Test the Waters. For many retail businesses kiosks are an attractive and affordable way to test out new locations and new product concepts. As a result, license agreements are generally short term and can be tailored to allow a degree of flexibility not normally present in traditional retail leases. For instance, a retailer may want a right to terminate a kiosk license in the event it decides to move into an-line location at the same shopping center. Similarly, a retailer may want the right to move to other kiosk locations within the same shopping center as they may become available.

Mine or Yours. Traditionally, kiosks and carts are supplied as-is by the shopping center and subject to limited modifications by the retailer. However, in some situations shopping centers may permit a retailer to provide its own kiosk that meets certain requirements. In situations where the kiosk is supplied by the retailer, the license agreement should specifically address the conditions of surrender. Issues such as who owns the kiosk at the end of the term and who must restore the shopping center if the kiosk is removed should all be specifically addressed in the license agreement. For example, kiosk agreements routinely require retailers to remove kiosks and restore the premises upon termination, which could include removing plumbed utilities and restoring flooring.

Operational Issues. The open air nature of kiosks creates several other operational issues that should be addressed during the negotiation process. For example, retailers often must arrange for separate secure storage in the shopping center – an issue that can be addressed in the kiosk agreement or in a separate storage space agreement. The fact that kiosks are located in common areas of shopping centers also means that they are often subject to liberal relocation rights at the discretion of the shopping center. If location is a critical issue, a retailer should ensure that the kiosk agreement appropriately restricts relocation. Lastly, shopping centers have become increasingly sensitive to nuisance issues commonly associated with kiosk operators. Excessive noise, light and aggressive sales tactics are likely to be prohibited by shopping centers. Depending on the nature of the retail operation and kiosk design, these provisions should be tailored to the specific operations of the retailer so as to allow, for example, interactive computer terminals and appropriate signage.

©2019 von Briesen & Roper, s.c


About this Author

Chris A. Jenny, von Briesen Roper Law Firm, Madison, Corporate, Real Estate and Family Estate Law Attorney

Chris A. Jenny is a Shareholder in the Madison office of von Briesen & Roper, s.c. He focuses his practice on representing business owners in a wide variety of niche markets to become more profitable while minimizing their risk and expenses. Chris’s practice has a heavy concentration in the real estate, construction, and information technology industries. This practical experience is a tremendous benefit to the contractors, suppliers, landlords, tenants and real estate developers he represents. Chris’s construction...

William West, von Briesen Roper Law Firm, Milwaukee, Corporate and Real Estate Law Attorney

Bill West is a Shareholder. He Chairs the Firm’s Business Section and the Firm’s Mergers & Acquisitions Section.

Bill is a trusted advisor to his clients and they rely on his ability to achieve desired outcomes in a practical, timely and cost-effective manner – in other words, he gets things done. He has over 30 years of experience in corporate and business related transactions including:

  • Mergers and acquisitions

  • Complex corporate and commercial transactions

  • Corporate governance and business counseling

  • Business formation, strategy and structure

  • Business succession planning

  • Commercial real estate

Bill’s clients are involved in a range of industries, and include public and privately held businesses engaged in a wide variety of domestic and international transactions including asset and equity acquisitions, mergers, reorganizations, divestitures and restructurings.

Bill is also co-chair of the firm’s Retail Real Estate section. He represents clients nationwide in the purchase and sale of commercial real estate. Bill has a national practice handling the retail real estate leasing needs of both tenants and landlords.

Bill is a member of the American Bar Association (member of the Business Law, Real Estate and Taxation sections), and the State Bar of Wisconsin. He is also a co-author of LLCs and LLPs: A Wisconsin Handbook, 1st, 2nd and 3rd Editions, published by the State Bar of Wisconsin.

Bill is recognized by The Best Lawyers in America® as “Lawyer of the Year” for Closely Held Companies and Family Businesses Law in Milwaukee (2017). He is listed in The Best Lawyers in America® for Business Organizations (including LLCs and Partnerships) (2015-2018) as well as Closely Held Companies and Family Businesses Law (2014-2018).

Bill served as Chair and a member of the Board of Directors of Catholic Memorial High School.

Jeffrey E. Mark, von Briesen Roper Law Firm, Milwaukee, Healthcare Law Attorney

Jeff Mark is a member of both the Health Care Practice Group and the Business Practice Group. Jeff advises hospitals, multi-institutional health care systems, physician groups and specialty providers regarding a variety of transactional health care related matters including affiliations, acquisitions and divestitures; fraud and abuse; Stark; physician agreements; and equipment and office space leasing arrangements.

Jeff also advises individuals, corporations, and partnerships regarding general corporate transactional matters...