Exclusivity, bank guarantee and turnover rent in a shop tenancy

All three are negotiable, and all three work differently on a street than in a mall. An exclusivity clause binds only the person who signs it, so on a shoplot row it covers only your landlord's units. A bank guarantee can stand in for the cash security deposit when the landlord agrees, and costs you bank charges instead of locked-up cash. Turnover rent is a mall tool; on shoplots it is rare and usually comes as a top-up on a fixed base rent. The paired article for owners is should a landlord accept these terms.

This is general information, not legal advice. Have your lawyer draft and review these clauses.

You can ask the landlord to promise not to let their other units to a named competitor or to the same trade. That promise is a contract between you and your landlord. It cannot bind:

• the owner of the next unit, who signed nothing
• a later buyer of your landlord's other units, unless the sale is made subject to it
• a tenant already in place when you sign

In a mall one owner controls every unit, so exclusivity can cover the whole building. On a shoplot row with twenty or thirty owners, your landlord may own only your unit. Before paying for exclusivity, ask what the landlord actually owns on the row.

Keep it narrow and it is more likely to be accepted and easier to enforce:

Some exclusivity arrangements may also raise competition law questions; your lawyer can advise. For how chains choose rows where a competitor is or is not a problem, see how chain brands choose locations.

Yes, if the landlord agrees. The usual cash package for a Malaysian shop is 2 to 3 months' rent as security deposit plus 1 month's utility deposit, about 3 to 4 months' rent upfront including advance rent (SPEEDHOME; see our deposit guide). For a chain opening many stores at once, that cash adds up, which is why brands ask to replace it with a bank guarantee.

How it works:

1. Your bank issues a guarantee in favour of the landlord for the deposit amount.
2. If you default, the landlord calls on the bank and is paid.
3. You pay the bank a fee and may need to hold a facility or margin with it.

The trade-off is cost: bank charges every year, against cash sitting with the landlord. For small deposits, cash is often cheaper.

Most landlords will ask for an "on demand" guarantee, payable when the landlord simply demands it. Malaysian courts rarely stop a call on an on-demand guarantee: the Federal Court in Sumatec v Malaysian Refining Co (2012) required a strong prima facie case of fraud or unconscionability. So protect yourself in the tenancy, before the guarantee is issued:

• the landlord may call only for sums due after written notice and a cure period
• the guarantee amount, expiry date and renewal duty are stated
• the guarantee is returned when the tenancy ends and the unit is handed back

Utility deposits are often still paid in cash.

You can propose it, but expect most shoplot owners to say no. Turnover rent is normal in malls. Sunway REIT's CEO told EdgeProp its malls collect base rent or a share of sales, whichever is higher, and Pavilion REIT's variable lease income was about 7% of gross rental income in FY25 (The Star, 11 May 2026).

• Audit. A mall runs the systems and leases to check tenants' sales. A private owner of one shoplot does not.
• Scale. A mall spreads the risk of a weak tenant across hundreds of units. One owner with one unit carries it all.
• Demand. In prime hubs a landlord can get a fixed rent from the next tenant, so has little reason to share your risk.

Where a landlord does agree, the usual shape is a fixed base rent plus a percentage of sales above a threshold. Pure turnover rent with no base is very rare. Our rent to sales guide explains how brands set rent ceilings.

If you want us to put these terms to landlords on your shortlist, start on the brands page.

Written by Tok Ginstee (REN 37505), CID Realtors Sdn Bhd (E (1) 1855). Updated November 2026.