On this week’s Bell Board Podcast Neil Bell and Franklin Outdoor President Dan Franklin discussed the pros and cons of percentage leases

Dan Franklin says a percentage risk can share risk

We’ve got some percentage stuff. It kind of really depends on the negotiation and that type of stuff. And you know, I’d rather do a flat lease…but if the landowner is willing to take a little bit of the risk…of this thing sitting empty, then they can kind of participate in the upside too…I know some people really don’t like percentage leases, and yeah, it kind of can cap sometimes how much you can really profit on the sign, but also it lowers your risk.

Neil Bell say percentage leases are more work and can create conflict

I have them where they want this this minimum, and the minimum is about where I want to pay them anyway…and then they want percentage or the minimum, and I’m like, well, I don’t know….I try not to do too many of those percentage leases just because I don’t like to have to go figure that every year…It’s like more paperwork, you know…You sell…five boards to somebody and you bonus them one, and it happens to be one that’s percentage, and the landlord says, “I saw a lawyer up there six months last last year. You don’t have it on your…income.” Well, we didn’t make any money.

Dan Franklin agrees

Or if you get a partial trade on something, right?…I had one where we traded blinds for the office..One billboard was on a percentage lease, and the landlord’s like, “Where’s my percent of that blind trade? ” I’m like, ” We’re talking like seventeen dollars.”  It became a huge huge thing…It’s better now with the software that is out there for calculating it. But if you have a percentage lease on…a poster unit, where you had to go back and figure out, you’re talking…18-20 clients. You’re trying to go through and pull the contracts out and the rate…

Do you accept percentage leases?  Take our poll below or email davewestburg@billboardinsider.com.  We’ll write a follow-up post.