A key ingredient to a successful boutique or salon is its location. A suitable premise provides the necessary space and foot traffic to attract new clientele. However, finding the perfect spot can be frustrating, especially when faced with a complicated lease agreement. Understanding how to navigate these agreements is essential. This article will guide you through common lease types and highlight two critical provisions: the permitted uses of the premises clause and the responsibility for maintaining the leased space.
Types of Leases
There are two fundamental forms of lease that primarily differ based on the duration of their term.
1. Fixed-Term Leases
A fixed-term lease expires on a specified date, meaning the lease will last exactly until then. If you sign a fixed-term lease for suitable premises, ensure you know your renewal options to avoid sudden relocation after setting up.
Conversely, understand your entitlements before the lease ends. You might need to move if the premises do not meet your needs, accommodate your stock, or attract enough customers. The retail industry is unpredictable, and you may want to end the lease early.
2. Month-to-Month Leases
Month-to-month leases renew automatically every month and can typically be terminated by you or the landlord at any time. If you break the lease, you only pay for the last month you signed on. Likewise, if the landlord breaks it, you will only be entitled to stay on the premises for the month you signed on for. This flexibility allows you to move your business without paying extra rent. However, it also means the landlord can terminate the lease anytime, potentially forcing you to relocate and set up again.
A factsheet that sets out the three ways to end a commercial lease in Australia: surrendering your lease, assigning it or subletting it.
Permitted Use of Premises
Certain premises can only be used for specific purposes or by particular businesses. As a boutique owner, ensure the lease allows retail use, and as a salon owner, confirm the premises can function as a salon.
Additionally, the lease may specify rules about opening days and hours. If your business needs to operate outside these hours, the premises may, similarly, not be suitable.
Be aware that landlords might have agreements preventing certain businesses from operating due to exclusive rights granted to similar companies. For example, if a landlord has a contract with a salon owner to prevent another nearby salon from operating, you may need to seek a different location.
You must find a lease agreement that permits you to operate your business freely. If the lease restricts you and the landlord will not adjust it, consider other locations for your boutique or salon.
Continue reading this article below the formMaintenance
The lease agreement likely includes a provision about who maintains the premises. Understand whether you or the landlord handles maintenance and repairs to avoid unexpected fees. As a salon owner, you will install equipment and furniture; as a boutique owner, you will change the decor to fit your brand’s aesthetic.
Key Takeaways
Lease agreements come in two primary forms and contain specific key provisions that a boutique or salon owner should know.
Fixed-term leases last until a specified date, while month-to-month leases renew monthly. Some lease agreements may restrict how you can use the premises, so verify that you can operate your boutique or salon there. Additionally, ensure you know who is responsible for maintaining and repairing the premises.
If you need help navigating lease agreements as a boutique or salon owner, our experienced leasing lawyers can help as part of our LegalVision membership. For a low monthly fee, you will have unlimited access to lawyers who can answer your questions and draft and review your documents. Call us today at 1300 544 755 or visit our membership page.
Frequently Asked Questions
There are two primary types of lease agreements: fixed-term leases and month-to-month leases.
A fixed-term lease expires on a specified date and lasts exactly until then. Knowing your renewal options is essential to avoid sudden relocation after setting up.
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