Business Basics for Booth Renters

Tired of being told when to work, what services you can offer, how you can offer them, and what to charge for them? Are you well established, highly organized, as well as marketing and business savvy? If this describes you and the prospect of flying solo appeals to you greatly, then you may be best suited as a booth or suite renter, versus as an employee in a commission salon.

The idea of booth or suite rental is not a new one, but it is not equally popular, let alone legal, in all states. For example, in the state of New Jersey it is not legal to operate a rental salon but in other areas, specifically along the West Coast, in Florida, and in some major U.S. cities, it is both legal and gaining popularity. In Southern California, for example, most salons are either suite rental franchises or rental salons. With the exception of regional or national chains, it’s somewhat rare to see a commission salon in this area. And this trend is slowly gaining ground across the nation.

The concept of being independent can be alluring to many free-thinking or entrepreneurial spirits. However, many don’t take into consideration all that is required to run their own business, which can have catastrophic consequences down the line.

Here are a few things on the business side to take into consideration before venturing out on your own.

A Renter by Definition
As a booth renter, you are running a small, independent business that is completely separate than the salon (or suite facility) business. As a business owner you will be responsible for every aspect of your business from maintaining your own set of books, paying your own taxes, carrying your own health, liability and disability insurances, providing your own marketing, tools and supplies, setting your own pricing, booking your own appointments, and collecting your own payment for services from your clients.

You also move from a traditional employee / employer relationship into a tenant/ landlord relationship, which will be subject to governing laws that differ from state to state. With this change, it’s very important for you to clearly understand the laws both nationally and in your specific area. It’s also highly advised to consult with a Certified Public Accountant (CPA) about how to set up your books, where to draw the line between you and the salon, and what tax or other forms are required to filed based on your new independent status.

The Agreement
It’s always advised to have a written lease agreement between the tenant and the landlord. It’s not only for everyone’s protection but it also helps to clearly define your independent status in the eyes of the Internal Revenue Service.

In addition to start and end dates and a clause for either party to terminate the agreement, the contract should clearly state the flat rate for the week or month, and outline what you will receive as a renter in exchange for that fee.

Typically, a rental contract will grant the renter the exclusive use of a station within the salon, which usually consists of a chair, mirror, counter or tabletop, and cabinet for storage for your supplies, and the electricity associated with that station. Unless they are part of your station, or room in the case of a suite, you should also have shared access to the shampoo area, changing area, restrooms, dispensary facilities (but not the color or other supplies), certain equipment like dryers, color processing machines, etc., and in some cases, certain services or supplies, such as use of a receptionist to greet customers and book appointments, towel services and back bar.

The agreement will also state what is expected of you. Besides playing nice with others and cleaning up after yourself and your clients, you will likely be required to have and display your license(s), provide liability insurance naming the salon as additional insured and be asked to work within the hours for which the salon is open for business.

What Else to Consider
It would be a good idea to ask if it’s an option to have a key to the facility. Rental salon owners are under no obligation to give you a key to the salon but do have to grant you access to the facility during all salon business hours. Some rental salons don’t mind offering a key, so it’s a good idea to ask.

Inquire about the salon’s policy for distributing walk-ins. Many rental salons have a handful of commission stylists, usually assistants who are building so they can transition into a rental, and in those cases the salon usually gives them the walk-ins. The salon technically is under no obligation to distribute any of them to you. Besides, you should already be fairly established before even considering becoming a renter.

Make it a point to ask about the salon’s policy for retail. Salon suites let you sell whatever you want product-wise but in the case of a rental salon, you may want to ask if they’ll allow you to sell from their inventory. In some cases, there may even be a commission structure set up for any sales. This could be an ideal situation, as you don’t have to finance or physically carry any inventory.

Avoiding Blurred Lines
Some salons offer add-on or optional services for renters including the use of the owner’s credit card machine, salon scheduling software or the services of the receptionist beyond what is outlined as part of your standard rental agreement.

Regardless of what is offered, be very careful not to blur the lines of your independent renter status in the salon. With the receptionist, be sure that you clearly understand that they are an employee of the salon and that you are only entitled to a certain amount of their time and or their services.

As a renter you are responsible to collect the fees for your services from your clients, so always use your own processing equipment / service. Also, keep your accounting and client information private and think carefully before diving into salon software that does not provide a firm division between your business and the salon’s.

This changing landscape of the salon industry is exactly why one salon software company stepped up their offerings with booth renter management software that allows owners to manage any or all of their stations as rentals.

According to Jim Bower, founder of Rosy Salon Software, “With all of the scheduling, business management and marketing features that Rosy affords, owners and renters can set their permissions as they see fit, while having the option to let the front desk manage their schedules. In addition to checking clients in, the front desk can schedule appointments for everyone, while the renter’s financials and client information remain absolutely private. This keeps the line between employee and independent contractor clearly defined.”

He continues, “Also, with our Booth Renter Management Software, the renter can simply disconnect from the salon at any point and either operate independently or plug into another salon account down the road. It’s all very turnkey and a win for both the owner and renters!”

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