Pop Up Businesses – Coodes’ property expert examines the legal implications

Thu 21st Mar 2013

An award-winning South West law firm is aiming to give the high street a helping hand by offering support for pop-up shops.

The commercial property team at Coodes Solicitors, which has seven offices across Cornwall and Devon, believe the short-term ventures could provide a much-needed boost to businesses, landlords and commercial property agents.

With the Government relaxing restrictions that deter businesses from temporarily using high street shops, Coodes believe the time is right to exploit this opportunity further.

Helen Willett, a member of Coodes’ commercial property team, said: “The high street has not enjoyed the best of starts to the year.

“Well know brands Jessops, HMV and Blockbuster have all hit the headlines after going into administration and the closure of stores is going to have a big impact.

“However, there are opportunities to provide a boost through the use of pop up shops and other pop up businesses, although there are legal implications that need to be taken into account.”

According to Coodes, landlords need to consider a number of factors to help them decide if it is worth it, or if they can turn the premises into a pop up shop.

Is it worth it? Sometimes the rental income received from a pop up business is not the primary driver. It’s worth considering whether a busy attractive occupied unit actually enhances the value and appearance of the remainder of the landlord’s property.

Planning – what is the current permitted use of the property and can a pop up shop be accommodated without changing this?

Is the landlord under any other restrictions? For example, if the landlord’s interest is held on a head lease, the head lease may not permit a change of use. Freehold title covenants also should be checked for restrictions.

Landlords of shopping centres or out of town retail parks may also want to consider allowing seasonal pop up shops onto the common parts. There will need to be a thorough review of the leases of all other units at the shopping centre/retail park to ensure that the landlord is entitled to do this, and to check whether there are any restrictions on the type of pop up business, plus whether the landlord is entitled to keep rental income to itself or must credit it to a service charge fund.

Is the landlord subject to any non-competition clauses that benefit neighbours?

There are also issues that need to be considered by occupiers and tenants.

If the premises are leasehold, does the lease permit the proposed pop-up? If it doesn’t, is the landlord prepared, notwithstanding the terms of the lease, to permit a temporary use and if so on what basis?

If the premises are to be used as a pop up restaurant some consideration will need to be given to the alcohol licensing situation. In the case of a significant pop-up enterprise it may be appropriate to apply to the local authority for a temporary premises licence. On the other hand, if the proposed pop up is small scale a bring-your-own-bottle arrangement might be preferable.

Truro’s Business Improvement District manager, Neil Scott, has said that: “Pop up shops can be great on two fronts – firstly, they provide the opportunity for new businesses to test the market in a relatively risk-free way and secondly they can help bring to light previously unused spaces in a town centre. They also help put like-minded businesses and individuals together, which may lead to future collaborations and a more permanent business proposition.

“It is important that when a pop up shop is set up that it ensures that the retail basics of good product, good service and a clean, bright, well organised trading environment are provided. This will also need backing up with a clear communications plan – part of the attraction of such ventures can be that they are only open for a limited period and that you have to be quick and ‘in the know’ to catch them.”

For more information please call Helen Willett on 01736 362294 or email her at helen.willett@coodes.co.uk

Thu 21st Mar 2013

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