What is a Salon Chair Lease Agreement?
A salon chair lease agreement is a legal contract made between an owner of a salon and a stylist or beautician within the salon. A salon chair lease agreement is commonly explained as an agreement between a salon owner and stylist outlining the mutual responsibilities and rights in order to operate a business relationship for mutual benefit . The owner of the salon is able to create and run his or her business without being the one to also do the hair and scalp treatments, while the beautician gets the prime location of the salon to conduct his or her business. Both of these parties are able to benefit from the relationship without having it to be an employer-employee relationship.
Key Components of a Salon Chair Lease
A salon chair lease is no different than any other lease of real property in that its terms govern the relationship between the owner of the property and the person who ultimately makes use of that property. Just as with other leases, a salon chair lease is a written contract designed to initiate the relationship between the salon owner or landlord and the individual who will be making use of a salon chair or other space at the salon. It sets out the terms under which the leasee commits to paying rent and holds out the rights of the salon landlord. Some of the more common conditions of a lease agreement may include the duration of the lease, how and when the lease will be renewed, and charges for the use of utilities. The lease will also specify the amounts due for partial months spent at the property or lease and whether and how the rent may be increased. In most cases, the use of the salon will also be governed by rules and regulations, to be made available to the leaseholder before they sign the lease.
Legal Considerations for the Lease Holder and Landlord or Lessor
For leaseholders, there are some statutes under the California Code that state that employment provisions cannot be waived such as the duration of time of their right to make a complaint, make a claim, file in small claims court or conduct an independent investigation. They could possibly argue that it is an "unreasonable restraint of trade agreement" which can be difficult to enforce.
In addition, the licensee is required to maintain his or her license in the salon, independent contractor agreement, advertising issues, possibly minimum wages, state and federal OSHA regulations may apply to them, chemicals and product liability may apply, health code standards, such as blood borne pathogens, workers compensation, if more than three individuals being hired, there are discrimination laws that must be followed. These agencies have jurisdiction over parties to investigate allegations made by either side which may result in punitive damages. If other employees make a complaint to the Labor Relations Board, they may get involved as well.
For lessors, they have the same burden of proof. They should consult with a union representative as well as the above organizations under their protocol to determine if any of the lessor and employee employment provisions infringe on the rights of the leaseholder.
Typical Provisions Found in a Salon Chair Lease
Every salon chair lease should be in writing. This is a fundamental requirement. Once in writing, there are a number of clauses that should be considered. Here are some of the most common clauses under consideration:
Termination. Salon chair leases are often terminable at will without any conditions. However, if a fixed term might be beneficial for you, then you should try to negotiate a longer term. Whether or not you try for an extended term can depend on a variety of factors. Generally, a long term lease promotes stability and predictability, while short term leases leave the parties subject to (and free from) risks associated with a lease with a long term.
Automated Renewal. Some salon chair leases have an automatic renewal period. Typically, a lease can be automatically renewed for the following term if neither party provides the other with notice at the time set forth in the lease. This is usually thirty (30) days. For example, a salon chair lease might provide that the lease shall automatically renew for an additional one year term if the parties don’t provide at least thirty (30) days advance written notice to the other that it does not wish the lease to be renewed.
Obligation to Comply with Applicable Law. The salon chair lease should require the lease holder to comply with all applicable laws, rules, and regulations affecting the salon in general and the chair holder in particular.
Salon Equipment. The salon chair lease should address the equipment to be used by the independent contractor. There should also be provisions specifying who owns the equipment, whether the equipment can be moved to another location, and issues like equipment storage and maintenance. If the chair holder is going to use the salon’s equipment, the lease should address issues relating to the ownership, maintenance and storage of that equipment as well.
Other Equipment Optional. Many lease agreements contain a clause providing that the chair holder is free to bring in his or her own equipment. If that is the case then the lease should also address the storage and maintenance of the equipment.
Sale of Salon. When and if the salon owner decides to sell the business, the Chair Holder should have the right to purchase the chair and any of the equipment that he or she chooses, and to do so on favorable terms.
Salon Chair Lease Negotiation Tips
Before you sign the lease agreement, you will be offered a chance to negotiate the terms of the deal. The owner may modify certain terms of the lease based upon your specific needs.
There are number of key issues that you will want to negotiate before signing the lease: You will want to discuss with the hall how the area for your station will be laid out, furniture, access to electricity and wireless, privacy among the stylists, such as the use of curtains and the hours during which you have access to the space, ability to schedule additional appointments without interference, price points for services rendered and products used, etc.
Some other hot points include: confidentiality (in case you decide to go out on your own or need to have your clients serviced by another stylist), how to protect personal property in case of theft, use of products produced by the manufacturer for use at your station, restrictions on hanging signs and displays, promotions, and the right to being able to negotiate your own lease if you decide to leave. If you desire to take clients with you who request for your services, make sure to put that in the lease also.
The best way to negotiate a salon chair lease is to obtain a lease document for your review early in the process, so that you can adjust any terms and conditions as needed, but prior to taking possession of the premises . Failure to do so may result in terms imposed upon you that are unfair. For instance, the lease may contain no provisions upon termination of the lease for an appointment to finish services. As a result, should you have a client in the chair when the lease expires, you would have to vacate the premises immediately.
You are in a better position during a negotiation with a new salon owner than if you attempt to negotiate with an established owner in a long-term arrangement. Such a landlord will likely be unwilling to make any modifications or changes, believing you will take the opportunity regardless of the terms and conditions that they chose to impose.
A landlord may have a different "bottom line" for a lease than you might desire. No business, including a hair salon and spa, will accept any terms and conditions you offer. So, remember that the other side has a bottom line as well.
The bottom line is that you should try to find a middle ground acceptable to both. Do not expect to get every term and condition you desire. Be open to accept a few concessions on both sides—but not so far that it jeopardizes the security of your business.
The Stylist’s or Salon Owner’s Legal Rights
Protecting your interests as a stylist or salon owner (including language to include in your lease agreement or the negotiations process). For stylists who are considering signing a salon chair lease agreement or salon owners who are considering hiring a new stylist under such an agreement, it is very important to do your homework, both before the contract is signed and once it has been signed. In their negotiations, stylists and salon owners are strongly advised to consider the following factors and strategies:
Visual Inspection or audit of type of work performed. The salon owner should make all reasonable efforts to seek visual information from a prospective stylist concerning the stylist’s type of work, including the following:
-Stylist’s specialty
-Stylist’s niche
-Required products, including color, perms and extensions
-Stylist’s preferred or required equipment
-Stylist’s portfolio
Inventory of equipment and property owned by the prospective stylist. Similarly, in order to assist the prospective client, the salon owner should also consider requesting the type and cost of equipment, products, furniture and any other materials or items that would be necessary for the stylist to begin his or her practice.
Permanent hairstylists should be disciplined to be careful when selling their client lists to practioners. Permanent hairstylists should not give away their client lists to new stylists. It is true that clients can be very loyal to stylist, but they are not slaves and they will start looking if they are not happy with their stylist after a while.
Once the contract is signed, the salon owner or stylist should always ask if the lease agreement is still available for them to review at any time during the lease.
Documentation, reminders and audits. It is important for both the salon owner and the stylist to diligently document and audit all terms and conditions of the salon chair lease agreement. For example, within thirty days of the signing of the lease, both parties should independently review the lease provisions and then compare notes. If there are any inconsistencies or areas of confusion, the parties should immediately either collectively or individually seek counsel in order to remedy any such anomalies.
Written warnings. In the event of a serious breach of contract, the salon owner should immediately provide the stylist written warning of a potential breach and/or termination of the lease agreement. If the breach is curable then, the stylist should be granted a reasonable amount of time to cure the breach, usually 14 – 30 days. If the breach is non-curable, or harmful to the brand of the salon, the stylist should immediately be terminated on the basis of a "no cause" termination. If the stylist does not have a signed lease agreement, or if the lease agreement is silent as to whether or not a violation of the rules and regulations is curable, the stylist should be immediately terminated without additional warning.
Final audit. When a stylist leaves a salon for any reason, whether voluntarily or involuntarily, it is important to conduct a fair final audit.
Clear expectations. Salon owners should always make sure that they are very clear and intentional about the circumstances under which a stylist will be hired or terminated. For example, if the salon owner wants to see lower retails sales at the end of every month, then the salon owner should clearly state that that is their hiring or firing requirement rather than assuming that the stylist already knows the salon’s expectations.
Realistic expectations. Salon owners should also be realistic about their expectations of their stylists. For example, it is highly unrealistic to expect all stylists to be 100% producers from the moment they begin practicing at the salon. All stylists who are hired at a new salon will typically require a learning curve of anywhere from two to six months.
FAQs on Salon Chair Lease Agreements
Many budding salon owners are unsure about the terms of lease/salon chair agreements. These FAQs will help smooth out the process when leasing a chair.
Are salon chair leases the same as commission agreements?
No. Under a commission agreement, you give the salon owner a certain percentage of your revenue as compensation. In return for this compensation, the owner provides you with supplies, utilities, janitorial services, receptionist services, and other support services. Under a salon chair lease, the owner rents you a portion of the salon and you pay a fixed amount of compensation to him each month.
Are salon chair leases the same as suite leases or independent stylists?
No. Under this arrangement you get your own enclosed room, which gives you privacy and autonomy. Under an ordinary salon chair lease, you do not have individual access to your area of the salon; instead, you have an open seating chart that the owner may change at any time . An independent contractor has complete freedom with regard to hours and supplies, while a salon chair lease is more like renting an apartment – the hours and supplies are up to you, but the owner controls the general atmosphere of the salon.
What are common pitfalls for salon chair leasing?
Common pitfalls include being unable to form a thriving business in a salon chair instead of a suite, signing a lease agreement that does not benefit you, renting a salon chair from someone who isn’t a licensed cosmetologist, forgetting to comply with local health department regulations, and not keeping personal supplies stocked in case the owner refuses to provide them.
Can a salon owner terminate the agreement at any time?
Usually a salon chair lease can be terminated by either party upon 30 days of notice. Commission agreements can be terminated in most states upon 24 hours of notice.
What does a salon owner provide in return for a salon chair lease?
This number can vary widely from salon to salon. The parties must also be aware of state and federal laws that require rates to be reasonable.