You need the lowdown on pitfalls of pop-ups

Pay attention to the small print to enjoy the benefits, says Stacy Campbell

THis year’ s edinburgh Festivals are showcasing how entrepreneurs and retailers can use pop-ups to great effect.

Whether bars, restaurants or shops, pop-ups allow retailers and other entrepreneurs to take advantage of seasonal opportunities, from summer festivals to Christmas entertaining or shopping. They also offer a flexible and affordable way to trial a new business idea or location – not just for start-ups but for established brands.

The good news for licensees and retailers is there are plenty more opportunities to open pop-up spaces across Scotland’s cities this year – such as the first Edinburgh Cocktail Weekend in October.

It’s not only licensees who can gain from opening popup 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.

In addition, councils and landlords are increasingly recognising the power of pop-ups to keep town centres dynamic and enticing.

However, before signing on the dotted line for your own pop-up space, 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 context here is complex, partly because one of the pitfalls involves the difference between a “lease” and a “licence to occupy”. Without going into 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, 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, and losing much of the flexibility they expected. So it’s worth remembering that a licence to occupy doesn’t always do what it says on the tin!

When checking the small print for a pop-up space, retailers and landlords should pay attention to a variety of aspects, from notice periods to access.

Notice periods: generally, both parties will intend the arrangement to run for a defined period – let’s say ten 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 and maintenance: regardless of whether there is a lease or a licence, both parties must understand their obligations here. 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 popups south of the Border, do not assume that the arrangements will be identical in Scotland, with its different legal landscape for commercial property.

Licensing: the fact that a bar, micro-pub or restaurant is a pop-up doesn’t avoid the requirement to apply for an alcohol licence.

None of these issues should deter anyone from opening a pop-up, but paying proper attention to the small print is essential to fully enjoy the benefits.

If you want your pop-up to be a stand-out success rather than falling flat financially or legally, take good legal advice. Stacy Campbell is a director in Lindsays’ commercial property team