By: Avi D. Kelin
In the recently concluded 10th season of the HBO show Curb Your Enthusiasm, Larry David introduced the concept of a spite store. If the local coffee shop, Mocha Joe’s, serves cold coffee and has wobbly tables, the only solution is to open a competing coffee shop right next door that has self-heating coffee cups and tables bolted to the floor. The concept applies not only to coffee shops in the Curb universe: if you experience poor service at a deli, exotic-bird store, or jeweler, open up a spite store next door to drive the offending establishment out of business.
But was there anything that Mocha Joe could have done to prevent a competing coffee shop from opening right next door? The answer to that depends on his lease.
While the concept of a spite store may be far-fetched, it is of crucial importance for businesses of all types to ensure that competitors don’t open up for business right next door. The way to protect your business is to negotiate an exclusivity provision into your commercial lease. Mocha Joe should have negotiated into his lease a provision that prevented his landlord from leasing any space to another coffee shop either in the retail complex or within a two-mile geographic area. Then, the landlord’s failure to abide by this restriction would be considered a default under the lease.
Just as many businesses are realizing the importance of a force-majeure clause in commercial contracts, an exclusivity provision only seems like an excuse to recycle boilerplate contract language until it becomes the key provision in the lease. Planning ahead and consulting with an experienced commercial-leasing attorney are the best ways to ensure that your business doesn’t fall victim to a spite store.