Pop-up retail is an ongoing trend in the hospitality sector, with temporary establishments popping up at various events, street corners and shopping centres across the UK all year round.
They can be a great way of showcasing your products, services or even new branding or concepts without the commitment of a long-term lease, as well as offering a relatively low risk opportunity to test out new locations whilst gaining valuable, immediate feedback.
However, there are plenty of legal and practical considerations to keep in mind before embarking on a pop-up venture.
Leases and licences
If you are granted permission to put a temporary shop within a store or within an empty retail space by a landlord, they may require you to sign a formal lease, which will regulate your use of the area within the shop and ensure that any changes you make are satisfactory.
You will need to be aware of your rights and liabilities, especially in respect of repair. If you want to sell alcohol or play music in your pop-up be aware that you will need a licence for both from your local council and PPL and PRS respectively.
The tenancy agreement is likely to be contracted outside the Landlord and Tenant Act 1954 so that you are not acquiring any rights of security of tenure and the owner will not be giving you a right to renew.
You will want to include an option to break the lease and vacate the space if the business is not viable. The owner may also require an option to bring the lease to an early end if your business is affecting its own or wishes to take on a more long-term tenant.
There are several questions you need to ask before signing a lease. If applicable, will your proposed use of the space in the centre be permitted by the owner’s head lease? Consent may be required to vary the use in the operating lease.
Health and safety and costs
Even though temporary, bear in mind that with pop-ups the same rules and regulations as in any commercial environment will apply and you will need to conduct a health and safety risk assessment and write a health and safety policy in relation to your use.
Costs are important too, so negotiate an all sum rent, which will include rent, service charge, insurance and rates contribution. Be aware however of gas/electricity costs and check anticipated figures.
Like obtaining consent to being there in the first place, if the space you wish to place your pop-up shop is under a lease, consent may be required from a superior landlord to any alterations to the property. You may need to prepare plans and provide details of any fit-out which could put some off the short term, high turnover nature of such an interest.
Also, its always advisable to prepare a schedule of condition to evidence the current state and condition of the property to prevent you having to reinstate the property to a higher standard of repair than it was when you took it on. You don’t want your short term venture to fund the landlords dilapidations costs of space they otherwise would have to pay for themselves to repair.
Change of use
If the area you are taking is less than 150 sqm the change of planning use may be accepted by your local council as a temporary flexible change of use, but you will need to notify them. To protect against unexpected liability costs you should effect third party liability/employer’s liability insurance. It is assumed that the business is registered with HM Revenue and Customs and you will need to ensure that the business is compliant.
Whilst there are many benefits of pop-up shops, and an increasing number of businesses in the hospitality sector are jumping on board to try their hand at opening a temporary retail establishment, the above shows how the legal process can be can be complex and confusing, so it can be helpful to seek legal advice to ensure you are following the correct protocol.