Let's talk... Profit / Revenue Sharing, & Management Contracts?

[Michael Ambrose]

Popularized by the hospitality industry, profit splitting, or otherwise known as profit sharing or revenue sharing, is a contract model I see more and more property owners using, across industries, to quickly fill a space and potentially earn a greater return on their investment.

For those new to the concept, the idea is that it allows a business to operate out of a space without ever getting locked into a lease, and instead guarantees a percentage of the revenue from the business to the LL. The LL certainly takes on a greater risk upfront, but if the business is able to deliver on the expectations set forth, it can be very beneficial to both parties.

I've been following this contract model for a some time now, however I've yet to find any applicable discussions on this topic that one could actually put into practice. Has anyone ever had experience with this type of partnership?

I myself am a coworking space operator looking for new opportunities to partner with LL's and expand into new markets following this model. How should I be approaching these LL's and what is the most effective way to deliver a proposal like this? Has your experience with similar partnerships been bad or good? Any other thoughts or advice for property owners and business operators that might be considering this as well?