Opening a Self-Storage Company: The Legal Considerations

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Table of Contents

• Business Structure
• Premises
• Contracts
• Security
• Key Takeaways

The self-storage industry in Australia has boomed since the first Kennards opened in 1973. Now, more than 1,000 self-storage sites are scattered across Australia. More and more Australians are using these sites to store excess personal property or office furniture, particularly since the current boom in apartment living is fuelling stronger demand for self-storage. If you are looking to take advantage of this trend by opening a self-storage company, make sure you consider some key legal issues first.

Business Structure

The storage business is becoming an increasingly competitive market. The supply of storage units in Australia forecast to increase by at least 10 percent in under two years. So it is important you set up your storage business correctly from the start to give yourself the best chance of success.

Do you want to operate your business in partnership with your spouse or close friend? Or would you prefer setting up a company so that you’re not personally liable for business debts?

Remember that tax and accounting factors influence business structuring decisions, so it is best to seek legal and financial advice before deciding on which business structure is most suitable for your circumstances.

Premises

Finding the right premises when you are opening a self-storage company is essential. You will need a place that has enough space to house multiple storage units and is easily accessible from the road by car or truck. Traditionally, self-storage operations have operated out of converted warehouses. However, there has been an increase over the last year in startup self-storage companies building purpose-built facilities. These facilities provide a better, more customised experience for storers, which means you can charge higher rental rates.

Choose which option is right for you, based on your available capital and desired way of working. You can increase your number of potential customers by locating your storage site near suburbs with a large population or high density of apartments.

Once you find your ideal space, you may need to apply for council permissions, such as development approval. You will also need a building permit and approval of your renovation plans to conduct any building work, plus certification once work is complete. Check the Australian Business Licence and Information Service or contact your local council to identify what business licences you may need and how to apply. A lawyer can help you with your licence applications to ensure the best chance of approval. The application process can be time-consuming and costly, so make sure you conduct careful research and allow plenty of time to acquire any consent.

Contracts

Before you open, you should have a services agreement prepared for customers who want to use your storage facilities. This contract should detail the terms and conditions of the customer’s use of the space, including:

• length of rental;
• payment terms;
• customer expectations (e.g. confidentiality); and
• any waivers of liability.

You may also choose to conduct a background or credit check of the customer as a term of the agreement. Having a written services agreement in place can minimise the risk of legal disputes in the future. It is best to get a lawyer to draft these contracts, so you understand your rights and obligations. They can also tailor the contract to your business’ advantage, and include disclaimer clauses to limit your liability in certain circumstances.

Security

You will need to decide on the type of security services, if any, you will provide to your storage units. This may vary depending on the type of unit, from locker box to mini-warehouse. There are a number of questions you should ask yourself, such as:

• will your keys be traditional or digital;
• will you provide CCTV surveillance and alarmed storage units or buildings at your storage site;
• do your self-storage premises have PIN-controlled security gate access; and
• will there be a manager or security guard on-site?

All of these features will require a considerable financial investment. However, they will also make your storage company a more attractive proposition for potential customers worried about their possessions.

Key Takeaways

Careful planning when opening a self-storage company will go a long way. Obtain legal and financial advice when deciding on a business structure and setting up your contracts. Work within your budget when establishing your storage units and security.

If you need help navigating the complex path of opening a self-storage company, contact LegalVision’s business lawyers on 1300 544 755 or fill out the form on this page.