When it comes to the legal terms surrounding a business agreement, confusion can often arise. One such instance is the difference between a concession agreement and a lease.
At a high level, a concession agreement is a contract between two parties where one party, typically a business, is given the right to operate within a particular space owned by another party, typically a property owner or landlord. A lease, on the other hand, is a rental agreement in which the tenant is given exclusive possession of the property for a set period of time.
So, is a concession agreement a lease?
The answer is no. While both involve the use of a space, the difference lies in the level of control and ownership. In a concession agreement, the property owner retains ownership and control of the space. The business is simply given the right to operate within that space. In a lease, the tenant is granted exclusive possession and control of the space for the duration of the lease.
Another key difference is in the nature of the payment. In a concession agreement, the business typically pays a percentage of its profits to the property owner. In a lease, the tenant pays a set amount of rent for the use of the space.
It`s important to note that concession agreements are commonly used in settings such as airports, stadiums, and malls, where a business may want to operate but doesn`t want to bear the financial burden of owning the space outright. In these cases, a concession agreement can be a mutually beneficial arrangement for both parties.
In conclusion, while a concession agreement and a lease may seem similar on the surface, they are two distinct legal agreements. A concession agreement involves the right to operate within a space owned by another party, while a lease involves exclusive possession and control of a space for a set period of time. Understanding these differences is vital for anyone entering into a business agreement involving the use of a space.