Pop-up bars can allow entrepreneurs or would-be bar owners to take advantage of a seasonal opportunity, from summer festivals to Christmas entertaining. The Edinburgh Festival showcases how a pop up can be used to great effect and in October the first Edinburgh Cocktail Weekend is taking place which will see further use of pop up spaces and events across the City.
It’s not only licensees who can gain from opening pop-up bars. Landlords too can benefit: not just from filling empty space, but as an alternative to entering a longer-term arrangement with a particular tenant.
However, before signing on the dotted line, it’s important to watch out for pitfalls in the legal arrangements. They could turn out to be less flexible than you expected and, in the worst case, eat into profits.
The legal background here is complex, partly because one of the pitfalls involves the difference between a ‘lease’ and a ‘licence to occupy’, the subject of many a legal case. Without going into full legal detail about the differences, a licence to occupy property is generally intended to cover short-term sharing of occupation, and for this reason tends to be more flexible than a lease.
However, the differences between a lease and a licence to occupy can become blurred, and the law is clear that if certain factors are present, a document which is referred to as a licence may actually constitute a lease. This may result in retailers unknowingly signing a lease as opposed to a licence. It’s worth remembering that a licence to occupy doesn’t always do what it says on the tin!
Rather than veer into the legal detail, let’s focus on some of the possible consequences of this, and the aspects retailers and landlords must be clear about. All these pitfalls can be readily avoided with advice upfront.
Notice periods
Generally, both parties will intend the arrangement to run for a defined period – let’s say 10 weeks. However, do not assume that the deal automatically terminates at that point: it may be necessary to give formal notice as well. Getting this wrong could mean the retailer having to pay extra rent in lieu of notice; for the landlord, it could mean being unable to recover possession of the property immediately.
Repairs
Regardless of whether there is a lease or a licence, both parties must understand their obligations in terms of repairs and maintenance. Is the retailer liable for external repairs as well as internal repairs? Could they be obliged to restore the property to a better condition than they found it in?
Access and exclusive use
Is the landlord free to access the property? Does the retailer have exclusive use of it, or could the owner also let others use the property in some way?
Scottish and English legal arrangements
If you have experience of running pop-ups south of the border, do not assume that the arrangements will be identical in Scotland, as the legal landscape for commercial property is different.
None of these issues should deter anyone from opening a pop-up. They can be an excellent business opportunity, but paying proper attention to the small print is essential to fully enjoy the benefits. In addition, the fact that a bar, micro-pub or restaurant is a pop-up doesn’t avoid the requirement to apply for an alcohol licence. If you want your pop-up to be a stand-out success rather than falling flat financially or legally, take good legal advice.
This article was featured on Friends of the Scotsman on 21st August 2017.
