Domain name lease WITH percentage of business - How much is standard?

NamesBond · Apr 8, 2013

Hi All,

I've been contacted by a party that wishes to lease one of my domains for a crowdfunding venture. Along with lease payments, potential Buyer is also offering a percentage (small) of the business profits to go along with the lease payments. For those of you who have negotiated such deals in the past, I'm curious: 1) What percentage of business profit is considered standard in a domain-lease-plus-participation agreement (0.5%,1%,5%?); 2) What is the standard length of such agreements?; AND 3) How did you structure the deal? (And yes, I'm aware that each deal is unique and negotiable, but I'm just trying to get a ballpark sense of what kind of lease payment/participation terms would be reasonable to ask for...:?

FYI, the domain involved is highly "brand-able," but does not have a lot of established traffic or revenue from parking. Also, Buyer is not interested in an outright purchase of domain at this time.

Thanks, in advance, to all for any advice and/or comments.

Biggie · Apr 9, 2013

i would say there is no "standard for percentage of business" in domain leasing, simply because leasing contracts aren't standardized.

especially when you consider, and as you said.... each deal is "unique and negotiable".

i would assess value of domain for tenure/duration of lease and whether those payments would be fixed or increase over time (interest), and if they are offering percentage of biz, will/would lease payments be scaled in accordance with or tied to "profit percentages" of the business or remain fixed irrespective to financial conditions of the business.

you'll also need stipulation in case there is no profit or how long to wait until it becomes profitable and how that effects "base" lease fee

consider 'first option buyout clause', a "no sell period" and what if outside offers are received.

late fee's, etc.

but i'd probably let them submit percentage amount that they are willing to part with first, and maybe try to deal it up over time if it's too low, but it wouldn't be a deal breaker when/if base lease fee is satisfactory.

Good Luck!

imo...