Keep Competitors’ Signage at Bay

March 17, 2017
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Many commercial leases include language that limits the size of billboards and signage on the roof or exterior, or in the common areas of the office building or shopping center. But tenants sometimes forget to negotiate restrictions on the content of those billboards and signs. It’s a mistake to overlook this issue, though. Giving the owner the unlimited right to choose the content for billboards and signs could result in third-party advertisements that hurt your business because they are offensive or compete with the merchandise or services you offer.

Instead, set restrictions on the content of billboards and signs near your space by using lease language that controls the types of advertisements. If you try to negotiate lease provisions barring the owner from letting your competitors advertise on the billboard or signage outside the building or center and in the common areas, expect it to argue that the rule shouldn’t apply to competitors that are already tenants of the building or center. However, if you give in to the owner on this point, say that only a competitor that’s already open for business at the building or center may advertise.

You should also try to bar the owner from permitting offensive advertisements. That’s tricky to do because you and the owner may not agree on what’s “offensive.” For example, a sign promoting a controversial organization or soliciting votes for a controversial politician might be considered offensive to some people, but not to others. That’s why it’s better to say in the lease that only advertisements for retail businesses are permitted. With a catchall like that, potentially contentious advertisements would be barred. Say that if the owner wants to permit any nonretail business advertisements, it must first get your written approval to do so.

To restrict competing and nonretail advertisements, use this language in the signage provisions in your lease, after checking with your attorney.

Model Lease Language

Landlord covenants and agrees that any billboards or signage placed on the roof or exterior of the [Building/Center], or in the Common Areas of the [Building/Center], shall be limited to advertising by retail entities not in direct competition with the business of Tenant, except, however, that such Common Area billboards or signage may advertise Tenant’s competitors who are already open for business in the [Building/Center]. In no event shall any such billboards or signage promote anything other than a retail business, unless first approved, in writing, by Tenant.