Concession
A right or privilege granted by one party to another; also a compromise or yield in negotiations.
While straightforward in theory, many businesses fail to actively track obligations tied to this concept - often resulting in missed deadlines, unintended renewals, penalties, or loss of contractual rights.
US Law · For business owners and foundersWhat is a Concession?
A concession is a grant of rights, typically exclusive or semi-exclusive, to operate a business or undertake an activity on specific premises, territory, or under specified conditions. The grantor (concession owner) grants these rights to the concessionaire in exchange for payment and compliance with terms. Concessions are common in retail, hospitality, transportation, and natural resource extraction.
In negotiation, a concession also refers to a compromise or yield by one party on a disputed point. The party makes a concession to move negotiations forward or to reach settlement, often in exchange for the other party's reciprocal concession.
Concession agreements are contracts. They define what activities are permitted, the territory or premises, the term, fees or royalties, performance standards, and termination rights. Breach of a concession agreement can result in termination and claims for damages.
In practice, many teams rely on a contract expiry tracking system to stay on top of dates and obligations tied to clauses like this.
Key Elements
Scope and Territory
A concession must clearly define what business or activity is permitted (e.g., "exclusive right to operate a restaurant" or "right to extract mineral resources") and the geographic or physical territory covered (e.g., "within the airport terminal" or "the northwest quadrant").Exclusivity and Competition
Exclusive concessions grant the concessionaire the sole right to operate - no competitors are permitted. Non-exclusive concessions allow multiple operators. Understand which you are getting and whether exclusivity is worth the higher fee.Term and Renewal
Concession agreements specify an initial term (often 5-20 years) and conditions for renewal. Short-term concessions give the grantor flexibility to renegotiate or terminate. Long-term concessions provide stability for the concessionaire to invest in the business.Fees, Royalties, and Revenue Share
The concessionaire pays for the right, usually as a fixed rent, percentage of revenue, or combination. Ensure payment terms, audit rights, and default procedures are clear.Performance and Compliance Obligations
Concession agreements typically impose standards on the concessionaire: hours of operation, service quality, appearance, customer service, compliance with laws. Failure to meet these can result in termination.Real-World Example
AirportCorp grants FleetFood an exclusive concession to operate the food court in the northeast terminal for 10 years. FleetFood pays 15% of gross revenue annually to AirportCorp and agrees to maintain service standards and hours. After 5 years, FleetFood stops renovating and reduces service hours to cut costs.
FleetFood's non-compliance with service standards and hours of operation gives AirportCorp grounds to terminate the concession. AirportCorp can revoke the concession and reclaim the space (subject to notice and cure periods in the agreement). FleetFood loses the right to operate and faces potential liability for damages. The concession agreement must specify what constitutes a default and what remedies the grantor has.
This is why many businesses adopt automated deadline tracking to ensure no critical dates are missed before they pass.
Sample Clause Language
Exclusive Concession GrantWatch Out For
Vague territorial definitions leading to disputes
If the concession area is not precisely defined (e.g., "the general area" or "the center region"), disputes over what is included will arise. Use maps, coordinates, or detailed descriptions. Include exclusions (e.g., "excluding the security checkpoint and restrooms").Assuming exclusivity without explicit language
Exclusivity must be stated clearly. If the concession agreement does not say "exclusive," courts will assume other operators are permitted. Do not assume you have the sole right - get it in writing.Not addressing renewal or renegotiation
If the concession term ends without a renewal clause, you may lose the right to continue. Ensure the agreement addresses whether renewal is automatic, optional, or requires renegotiation of terms.Don't let concession deadlines catch you off guard
Key dates tied to concessions - renewal windows, expiry cutoffs, notice periods - can easily slip through the cracks when tracked manually. Missing them triggers automatic extensions, penalties, or lost rights. ExpiryEdge tracks every critical deadline and sends automated reminders before they're due - so nothing slips.
Instead of relying on spreadsheets or manual follow-ups, a centralized renewal reminder system ensures every deadline is visible, tracked, and actioned automatically.
How to Use This in Your Favor
Secure exclusive rights if possible
Exclusivity reduces competition and protects your investment. If operating a concession requires significant upfront cost (build-out, equipment, inventory), negotiate for exclusivity to ensure you can recoup your investment.Include clear performance standards and dispute resolution
Define performance metrics (service hours, quality standards, cleanliness) and an arbitration or mediation clause to resolve disputes without litigation. Include a cure period - a reasonable time to fix minor defaults before termination.Related Terms
Frequently Asked Questions
What is the difference between a concession and a lease?
A concession typically grants the right to operate a specific business or activity, often with exclusivity and performance standards. A lease typically grants the right to occupy space and use it for any lawful purpose. Concessions are more restrictive and specialized.
Can a concession grantor terminate early without cause?
Usually only if the agreement permits. Most concession agreements allow termination for cause (breach of performance standards) but not for convenience. Carefully review what grounds allow termination. If the grantor can terminate at will, your investment is at risk.