We are seeing an emerging trend of savvy businesses maximising their commercial office space by offering a co-sharing arrangement between members. Below, we answer some frequently asked questions including what is a hot desk licence and how does it work?
1. How Does a Hot Desk Licence Work?
There are two types of businesses that set up a hot desk arrangement open to the public on a membership basis:
- Small businesses that have commercial office space bigger than what they need and have the capacity to licence the space.
- A business set up for the purpose of licensing out hot desks to a group of members with a common interest or in the same business industry (e.g. self-employed contractors in the same industry wanting to share common resources and ideas but working independently).
2. How to Get Started?
Importantly, the entity or person named as the tenant under the lease is ultimately liable to the landlord for whatever happens in the premises. As this also includes incidents caused by a third party, you should ensure you have a carefully drafted licence with the appropriate indemnity provisions.
Before setting up your hot desks, you should first review the existing lease. It is important to ensure the landlord has consented to such an arrangement. Without the landlord’s consent, any licensing of the premises would be considered a breach of the lease. This may result in fines, or even worse, give rise to a termination of your lease.
Once you get written consent from the landlord, you then need to think about how you want to set up your hot desk licence. Some important issues to consider are:
- What is the membership fee, how will it be paid, how will it be increased?
- What does the “membership package” include? Will the member be allocated a random desk or a designated desk space?
- Will the membership package be on a tiered basis? For example, will members who pay for six months or more have exclusive benefits (such as free meeting rooms) compared to casual memberships?
- Terms and conditions regulating issues like download restrictions and use of common areas.
- Will there be any lockers or storage areas for members to store valuables or bulky items during the day?
- Is there car parking space?
- What are the access hours?
- Are there release provisions for unforeseen circumstances such as theft, loss of data due to internet connection.
- Have you got insurance in place anticipating this type of arrangement?
- Are you able to set up an account for the member’s security deposit during the term of their licence?
3. What Events Will Give Rise to Termination?
The actual hot desk licence will address most of the above issues and also have a terms and conditions document annexed to the licence or on the licensor’s website.
The hot desk licence will also set out the termination events. Termination events are usually due to a breach, mutual agreement or other reason as stated in the agreement. It is important to put in a disclaimer that termination for the reasons listed does not give rise to a claim for compensation.
Finally, it may be the case that the hot desk licence must first be submitted to the landlord for approval before it can be set up. It makes sense to get the landlord’s approval before drafting a lease.
Entering into a host desk arrangement can be a profitable or beneficial arrangement with some planning. A comprehensively drafted hot desk licence should consider the issues discussed above. If you have any questions, get in touch with our commercial leasing lawyers on 1300 544 755.