The instrument
A licence to occupy, not a right to the property.
A lease under the Transfer of Property Act, 1882 transfers an interest in the property and creates a tenancy. A leave-and-licence agreement grants permission to occupy and transfers no interest at all. Indian landlords overwhelmingly prefer the second, and the reason is recovery: a licensee has no tenancy to assert, so possession is far easier to get back, and the state Rent Control Acts that protect long-standing tenants are avoided.
The eleven-month term follows from the Registration Act, 1908. An instrument creating a tenancy of a year or more must be registered; eleven months keeps the arrangement below that threshold in the common reading, which reduces stamp duty and registration cost and keeps renewal a matter of agreement rather than right. For a franchisee this is the point that matters: a fit-out amortised over five years may sit on a document that expires in eleven months with no renewal you can enforce.
- No tenancy, so no statutory security of tenure to fall back on
- Renewal is negotiated each term, not a right — and escalation is negotiated with it
- Stamp duty and registration charges vary by state and are the occupier's cost in practice
- A fit-out outliving the agreement is the single most common mismatch
What it costs to take
The deposit is the largest cheque you write first.
Indian high-street practice runs an interest-free security deposit of several months' rent, and the engine models ten months for Indian markets — against three in the US, UK and UAE. On a unit at ₹95 per sq ft per month, the Indian tier-1 anchor the engine uses, a 1,000 sq ft shop carries roughly ₹9.5 lakh of deposit before a single rupee of fit-out. That money is locked, earns nothing, and returns only at exit.
Rent itself is quoted per square foot per *month* here, not per year as in the US, UK and UAE — a twelvefold difference that makes cross-market comparison treacherous. On top of the rent, GST at 18% applies to commercial letting, and escalation of roughly 5% a year, or 15% at each renewal, is the common pattern.
Scroll sideways to see all columns
| Market | Rent quoted | Deposit modelled | Tax on rent |
|---|---|---|---|
| India | per sq ft per month | 10 months | 18% GST |
| United States (New York) | per sq ft per year | 3 months | none |
| United Kingdom (London) | per sq ft per year | 3 months | 20% VAT if opted to tax |
| UAE (Dubai) | per sq ft per year | 3 months | 5% VAT |
The deposit is the line most often left out of a headline investment range. It is refundable, so it is not a cost — but it is capital you cannot deploy, and it belongs in the funding plan beside the fit-out.
Organised retail
In a mall, the rent is whichever number is higher.
Mall and organised-retail terms work differently from a high-street licence. The common structure is a minimum guarantee against a percentage of revenue: you pay the greater of a fixed monthly rent or an agreed share of turnover, so the landlord takes the upside while the floor protects them on the downside.
Common area maintenance is charged separately and per square foot of chargeable area, which is larger than your carpet area — the loading factor between carpet, built-up and super built-up area is where two quotes that look comparable stop being comparable. Ask which area the rate applies to before comparing anything.
