Read this before You Rent a Chair/Suite/Room

Three things to ask before renting Chair/Suite/Room + Three Red Flags to look out for!

So you found a salon that you like, and think will be your new home. How awesome! Before you commit, please do your “due diligence.” This means taking the time to research, ask questions, and think about pros and cons. Ask a LOT of questions, check the salon’s rep, maybe speak to another renter in your process of determining whether or not to take the lease.

There are MANY questions and steps that you should take in performing due diligence. There are tons of resources available to learn the basics.

What I am going to cover in this issue are some of the things that no one else is talking about, plus three red flags that should be standard knowledge, but seem to be rampant in our industry.

And before getting into it– I want to make sure everyone that reads this understands first and foremost the Golden Rule of Renting:

As a renter – You are a separate business from the salon. That means you do all your own books, financials, you name prices, schedules, take client payment, keep your own insurance etc. The owner is simply a landlord. I will list three red flags that will provide more guidance on this below.

OK – now that’s cleared. Here are the three things that aren’t really out there, but must be considered:

Always see a copy of the salon owner’s lease agreement for the facility. Check for:

Are sub-leases allowed? If no, then your rental would be unauthorized. Don’t proceed, find another salon

When is the lease agreement up and what are the renewal options?

Is there anything in the lease regarding excluded services? And if yes, are those any services you plan to perform?

How are incoming requests handled?

Potential clients often do not know whether a salon is a rental or not. Meaning they have no idea that everyone in a rental salon is their own business and to contact them individually. It is very often that a client will reach out to the salon and ask for an appointment. This is where the important question comes in:

How does the salon owner handle such requests? Do they have a solid referral system in place? Or do they take all of those for themselves (assuming that they do hair as well)?

What you want to see is a system in place. The owner is not obligated to send any client requests to renters – that’s fair. However IF the owner is offering to help build clientele, and send requests to the renters in their salon, they should have a clear method that is fair & equitable amongst all the renters.

If the owner says they do refer client requests but do not offer a clear answer as to how; that could be a problem. Use your best judgement, and you could possibly set up an arrangement to help solidify a system that would work.

What is the retailing policy?

Some owners won’t have one at all. That is fine, as long as there is no contractual language barring you from selling your own retail – if you want (and you should want – there are several reasons to do so).

Some owners will only allow you to sell the products they carry. They are well within their rights to do this, IF it is in your contract/ lease agreement. However, it is crucial that you ask HOW you get paid for selling the retail. I tend to see commission as an orange flag – meaning it can work, but it can also cross the line in a few ways.

The issue isn’t necessarily whether or not the owner will prohibit sales of retail outside of what they offer – it is how they PAY you for the sales of their retail.

Bottom line- it is most ideal and less messy if the owner doesn’t have any product retailing restrictions in the contract. However, if they do, and you do not mind working with the brands they carry – find out HOW they get paid/ you get paid and talk to your CPA before moving forward.

Three red flags

The owner takes payment on your behalf. This limits your economic control over your own money and is not a benefit to your business.

Pay you commission for services/ charge you “percentage rent”. This is giving away way too much money and could interfere with your ability to profit, take needed tax deductions and more.

Require you to remain on premises when you do not have clients. The landlord cannot have behavioral control over when and how you work. They can limit access to the facility during set operating hours, but cannot tell YOU when to be there within those hours.

How to know if any of these red flags are present – ASK! Before agreeing to rent, ask the owner.