Disappointed by the wilted baby salad leaves at your local salad bar and the selection of questionable vinaigrettes? Do you make friends with your salads? If so, you might be thinking of opening your own salad bar. However, before leaping into buying mountains of crispy fresh baby spinach or scouring the market for the best and freshest suppliers, make sure you address these three key legal considerations before opening a salad bar.
The Commercial Lease
If you have found a great location for your salad bar, with high foot traffic during the lunch hour, make sure that your commercial lease is not the factor that makes your new location less than ideal. At the very least, have a lawyer make sure that the lease does not contain nasty surprises.
You will have a chance to discuss and negotiate the lease with your landlord before signing on the dotted line. Importantly, once you sign a heads of agreement (or offer to lease), this may be binding. Therefore, you should also have a lawyer to check this document in addition to the lease.
Length of Lease Period
Most businesses are not immediately successful overnight. Therefore, before opening a salad bar, you need to make sure the lease period is long enough for you to get comfortable, start attracting returning customers and to overcome any initial road bumps.
For example, a lease period of one year is likely going to be inadequate for you to set up your salad bar. Ideally, for a new salad bar business, you would want a lease with a one or two-year initial period, then with an option to renew for another three or four years. The option should be at your discretion, not the landlord’s discretion.
Additionally, consider trying to negotiate a rent-free period and lease incentive to help you establish the business.
Breaking the Lease
It is usually very difficult to break a lease. Not having enough money to pay the rent is certainly not a reason a landlord would accept. This would usually be a default of the lease, leaving you liable to pay damages.
An alternative that may allow greater flexibility is for you to have options to renew the lease at regular intervals. For example, being able to choose not to renew the lease after the first year gives you an exit strategy if the business is not going well and you do not want to continue.
Paying the Outgoings
Outgoings or operating expenses will be the subject of negotiation between the parties. In retail premises, it is common for the tenant to pay outgoings. The landlord should disclose these to you in a disclosure statement. This is a legal requirement the landlord needs to meet before you enter into the lease.
When opening a salad bar, services such as electricity and telephone will be at your cost. You will need to pay these on top of any other outgoings or marketing levy.
Lease Personal Guarantees
Landlords often ask tenants to sign personal guarantees when they enter into a lease using a limited liability (Pty Ltd) company. The effect of a personal guarantee is that the landlord can pursue your business and you personally for unpaid rent and any other damages or monies owing under the lease.
This increases your personal risk and places personal assets such as your home or motor vehicle at risk. Therefore, if possible, avoid this altogether and if not, at the very least speak with your accountant to ascertain your personal risk before agreeing to any personal guarantee.
Compliance with Zoning Laws
Do not rely on the landlord to confirm that you can run your salad bar on the premises. Before opening a salad bar, it is up to you to check that local council zoning laws allow you legally run the business.
There have been cases where a landlord told the tenant that they could run a particular type of business, but the tenant later found out they are in breach of local planning laws. Do not let that happen to you. If planning laws are an issue consider inserting a special condition in the lease to make it conditional upon granting of a development consent for the permitted use.
Food Safety Laws
Every food business in Australia, from silver service five-star restaurants to school canteens must ensure that their food is safe to eat and that they train staff appropriately. This is a legal requirement. Food safety laws are enforced at a state and local level and there are significant penalties for not complying. Therefore, make sure that you are aware of what food safety laws apply to your salad bar. If in doubt, speak with a lawyer to obtain advice on what specific state-based laws apply to your business.
Generally, the best way to protect your salad bar and your customers is to make sure that employees who handle food undertake a recognised food handling course. You should also nominate a food safety supervisor. Choose a food safety supervisor that has been trained by a registered training organisation and that the supervisor has a valid certificate confirming that they have received appropriate training. Lastly, ensure that every food handler participates in regular refresher courses on how to safely handle food.
You will likely need a hand or two to run your salad bar. When you are hiring your first employee, you should ensure that you are familiar with employee rights and entitlements under the Fair Work Act 2009 (Cth) and any applicable award.
Register for PAYG (Pay As You Go) so that you can withhold tax from your employees’ salaries. Next, work out whether your employee is covered by an award. Most employees in Australia are covered by an award or a ‘registered agreement’. Any employees not covered by an award or registered agreement are entitled to minimum benefits set out in the National Employment Standards.
The Fast Food Industry Award 2010 may cover servers in a cafe or restaurant. You should check the Fair Work Commission’s website to browse a list of all Australian awards or contact a lawyer to speak about applicable awards and entitlements.
Lastly, you should ensure that you have all your paperwork in order. Make sure you have an employment agreement which is tailored to cover whether the employee is casual, full-time or part-time. You should also have workplace policies regarding:
- food handling;
- occupational health and safety; and
- acceptable standards of behaviour.
When opening a salad bar, it is important that you cover off three key legal considerations before rushing into signing a lease and buying stock. Consider whether:
- the lease contains appropriate terms;
- you have complied with food safety laws; and
- you have addressed employee rights and entitlements.
Running a salad bar can be fun and rewarding. However, make sure that you start on solid legal foundations so you can continue to serve your customers well. If you need legal advice what to consider when opening a salad bar, call LegalVision’s business lawyers on 1300 544 755 or fill out the form on this page.
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