What Is a Salon Booth Rental?
One of the most cost efficient models of operations for beauty salons is that of the salon booth rental. Simply put, the concept of salon booth rentals is that an independent beauty professional rents out space in a salon for their own business. The appeal of this business model is that beauty professionals no longer need to manage the costs and expenses that are associated with an operation as large as a salon, while the owner of the salon is able to keep expenses down by bringing in independent contractors without adding staff. This model also offers beauty professionals the freedom of being their own boss while maintaining their own advanced scheduling systems and management practices. It is a model of operations that, when properly drafted and executed, can work very well for both the beauty professionals and the salon owners. The basic concept of the salon booth rental system is as follows: a salon owner leases out space in their salon (such as a private suite or a station) to a beauty professional , who has the ability to use the space as they see fit in order to run their own independent business. The salon owner may provide some services to the beauty professional who rents space in their salon, such as telephone answering services and/or salon supplies, or it may be left entirely up to the beauty professional to provide these supplies and services for themselves. In return for these services, the beauty professional pays a rent or commission to the salon owner, which payment is typically based on the sales of, or services performed, by the beauty professional. The agreement between the salon owner and the beauty professional should clearly set forth how the rental arrangements will operate and be structured, especially with respect to the amount of payment owed to the salon owner and any early termination provisions. As with any other type of lease, a salon booth rental lease agreement should set forth both the rights and obligations of the parties. Property owners should consult with an experienced attorney when drafting a salon booth rental lease agreement for their beauty salons.
Key Components of a Booth Rental Lease Agreement
While state-specific requirements vary, generally speaking, the leasing of booth space is not legally required to be in writing. If salon owners are contracting for part-time leases, they would be wise to have a written lease, particularly if the owner plans to have multiple renters using the same chair. Most salon owners do have their tenants enter into a written agreement. The written agreements do not have to be lengthy or overly complicated, but should set forth the basic elements of the relationship. Important components of a written lease include:
- Term – How long is the term of the agreement? The lease should specify whether it is a one-year, month-to-month or other term.
- Rental Amount and Payment Terms – The amount of rent will be hotly negotiated. The agreement should state the amount of rent, whether there will be periodic increases, how and when it will be paid, who pays utilities, and whether or not the lessee collects sales taxes.
- Business Hours – Many salons are open evening and weekends, so it is important that the agreement specify the business hours, e.g. 10 a.m. to 7 p.m. Tuesday through Saturday, and noon to 4 p.m. on Sundays and Mondays. The agreement should also specify whether the lessee has to commit to working a certain number of hours per week or whether he or she may come and go as they please.
- Property Damage and Indemnity – This is a tricky subject, as the salon owner does not want to be held responsible for the unintentional damages caused by a negligent employee, yet the employee does not want to be responsible for damages beyond his or her control. For example, a stylist might be using a heater to dry a customer’s hair and it may start a fire. Who will be held liable for the damages caused by the fire, and to whom? The agreement should specify whether the lessor (owner) is providing insurance to protect the lessee (stylist), whether the stylist is responsible for obtaining his or her own insurance and how much coverage must be obtained, and who is responsible for any increase in insurance premiums that results from the negligent actions of the leaseholder.
- Non-Solicitation – Many salon owners want their lease agreements to prohibit the stylist from soliciting the owner’s existing employees and customers for one year after the termination of the lease. Allowing this restriction will mean that the salon will have to comply with all of the aide-de-camp requirements regarding non-competition and non-solicitation before it can begin to enforce the lease terms.
Why It’s Important for a Booth Rental Lease Agreement to Be in PDF Format
Having a lease agreement copied and published in PDF format offers the reader a number of advantages. First of all, PDF files are a universal format not subject to compatibility problems. There are a number of free PDF readers available for download on the Internet. A PDF file will retain its original formatting regardless of the application used to create it, so there are no worries about formatting problems. The PDF document remains a letter sized page, so printing is easy and each printed copy is exactly alike.
Suppose the barber or beautician finds that a tenant split from the salon without providing deposit records. Wouldn’t it be nice to be able to bring out a copy of the PDF file and review the lease agreement signed by the person who owes the money? Any changes or damanges to the PDF file are saved in a new file; the original file remains unedited.
Many client computers are configured to open a PDF file immediately. All an interested party must do to read the file is click on its link. Opening the file on the client’s computer activates the computer’s PDF viewer and displays the file.
If for some reason the client computer doesn’t have a PDF viewer installed, the reader can easily obtain a free copy on the Internet. PDF readers are available for Windows, Linux/Unix and Macintosh computers. It is also possible to view PDF files with some of the handheld electronic readers available.
Establishing a Legally Binding Lease Agreement
The legally binding nature of a salon booth rental agreement is important to both the independent contractor and the salon owner. It’s the document that both parties will turn to in the case of a dispute, so it must clearly outline the rights and responsibilities of both the landlord and the independent contractor, and follow both federal and state laws.
It’s usually a good idea to have an attorney draft the agreement. The basic structure of the document is fairly standard. There is little need to reinvent the wheel in this case, but it’s best to avoid any ambiguity in the wording. Ambiguous statements can cause problems if they are challenged. Discretionary, optional language leaves room for misinterpretation, and vague wording is open to interpretation.
While you can write an agreement in plain English, there are key legal phrases that must be included to make the document enforceable. For example, "lease term" refers to the length of time the agreement is in effect, so that must be included. A "termination date" is important in that is refers to when the agreement ends. Also, there should be a warranty that no one other than the signatories to the agreement helped draw up the document, and an acceptance of liability clause . If you have a dispute decided in court, the judge or arbiter may look at the language in favor of the party who did not draft the document.
Other real estate agreements such as a standard office lease do not contain many of these provisions, and so an attorney must be consulted if you want the contract to conform to the type of service being provided, in this case, booth rental.
An attorney can guide you in drafting, but also in determining whether you need to register the lease and/or the owner. A few states, including California, require lessors to have a "lessor permit" or license, which will be regulated by a state board. In the case of California, the Board of Barbering and Cosmetology is responsible for licensing related to this occupation. However, Florida does not require salon and barbershop owners to have a permit or license. You can check with your Secretary of State or Department of Licensing to see what requirements your state has.
If the lease is properly worded, it is legally binding, but it is always good to have an attorney review the agreement once you have it drafted.
Mistakes to Avoid when Writing a Salon Lease Agreement
Some of the pitfalls that salon owners as well as stylists can make is failing to take the time to review a rental agreement before signing it. It is important for both parties to take the time to go over the agreement with a fine-toothed comb as many times an agreement may look fine on the surface, but have hidden landmines that could cause problems for both parties when the business relationship goes south. Other times, mistakes are made when an owner and stylist don’t clearly understand what the terms of the agreement are supposed to be, and sign it anyway expecting things to work out just fine.
One of the most common situations that occurs is when stylists find a rental agreement that they think looks mostly like the ones that have been used at their previous work places, but after reading it more carefully they realize there are several differences. For instance, one common thing they will find is the responsibility for performing their own taxes. Many people mistakenly believe that because they are classified as a "booth renter" that their owners will be responsible for the taxes. But the agreement often states that the stylist is supposed to be responsible for paying both their own federal taxes as well as for any taxes that their clients may pay if they are using a credit card. Most times, owner will not want to bother going to the trouble of collecting and paying sales tax, so it is the responsibility of the stylist to keep their own accounting records as well as making sure their clients pay the appropriate taxes on their services.
Another mistake that is encountered is when the stylists find that the agreement states that they will be charged more money for the rent if they don’t bring their own towels, hair products or equipment. The trouble with this is that oftentimes, the stylist doesn’t realize that they will be required to bring their own equipment until a few days before they are scheduled to start working. This prevents them from having the time to go out and buy the necessary supplies at a reasonable price. While a fair owner will often allow the stylist enough time to make purchases if they discover this clause beforehand, if they don’t discover it until after they have moved into the salon, there is little an owner will do.
Another common area that salon renters fail to read carefully is the section concerning termination of the lease if the owner decides to sell their business. This can often lead to flat fee lease holders being ousted from the salon on very short notice and little compensation. It is usually in the best interest of all parties to have a termination clause that works for both owner as well as the stylist. It is wise for both parties to be clear on how much notice they will be required to give if they want to terminate the lease, as well as how soon either party can evict the other.
Online Tools for Creating Lease Agreements
In addition to ApartmentGuide.com, there are some other quality online resources that will provide you with a sample lease agreement that you can customize for your own use as a salon chair renter.
One of these resources is Westlaw. This is a search engine used by real estate professionals and attorneys alike to find relevant online law. They have an extensive library of state law lease documents that can be pulled and edited based on your own requirements. The topics are organized according to the state the lease agreement is used in so you will need to indicate where your salon is located for best results. In addition to free sample lease agreements, Westlaw provides a wealth of information about landlord and tenant law in each state and how it applies to the rental of a chair at your salon .
Another useful tool for developing your own rent-to-start business plan is the StyleSeat Platform. While StyleSeat is an online scheduling service for salons, it also provides free a downloadable salon commission agreement and free salon space rental agreement form (one-year duration). You may download these as is, or insert the elements that you feel are suitable to your operation. As a bonus, StyleSeat even has a standard salon employment agreement here.
The last digital tool available to you is Legal Templates. Legal Templates offers a free salon rental agreement form that you can easily edit as needed. Simply answer the questions posed in the form and it will be generated according to your specifications. You are allowed unlimited changes to the original residential lease template.