Joint tenancy: a solution for the crisis?
Do you dream of having a large, beautiful retail outlet on a busy main street in the city centre but don’t have the financial resources required? What if you shared the cost? More and more retailers are turning to shared tenancy to lower the cost of leasing a ground floor retail unit. Time and money savings, and more! Ready to move in?
When people talk about joint tenancy, they tend to envision the flat in the film Pot Luck or a large house shared Fraternity-style. Or a work space like a co-working office.
On the other hand, it’s harder to imagine a restaurant run by three different chefs. Or a shop that’s a barbershop, a book shop and a canteen. Yet, given the ongoing crisis, a trend is becoming more apparent and scoring points with Brussels-based entrepreneurs. Joint tenancy: a good idea or a bad idea? The answer in this article!
Why share your shop or restaurant?
Economies of scale
One of the major benefits of joint tenancy is the financial benefit. Sharing a space, means sharing the rent.
It will enable you to think in terms of a retail ground floor which you couldn’t have afforded alone, of a better location or of more space.
The rent is split amongst the occupants. So are the variable (electricity, water, heating, etc.) and fixed costs, including the Internet connection, the security system, display window and sign maintenance, etc.
Joint tenancy can also include sharing equipment and management tools: till, furniture, van, etc. And, why not, sharing on-call times in the shop if the relationship allows.
Mutual assistance and solidarity
As a retailer, you often have to be in two places at once: welcoming customers, tracking inventory, marketing, bookkeeping, etc.
Yet, despite all of the commotion you, paradoxically, often feel very alone.
Joint tenancy lets you exchange and have company as well as contribute your talents to the community and conversely. You have great communication skills, but you’re a loss with numbers? Your joint tenant is good with accounting and taxes? Take advantage of everyone’s strengths. And, if you need a coach for another topic, share the expense!
Increased visibility
It’s obvious that you should share your space with retailers who have the same values. This shared vision can be a winner for the visibility of your products and/or services.
Assuming that the other tenants have a similar target audience or that your offerings are complementary, you can put the spotlight on your brand every time someone comes into the shop for another reason.
Don’t they say union is strength? When you communicate about your brand/concept, market the other tenant’s as well, expand networks and increase the number of guests to your openings.
How does it work in practice?
We looked at different types of joint tenancy for this study:
- You are both the owner and an occupant of your premises but you want to share them
Example 1: A restaurant provides the kitchen and dining room to another concept when it’s closed.
- You’re a tenant and you want to sublease part of the premises
Example 2: A seasonal concept uses the premises during the period suitable to its products and is replaced by another one for the other part of the year.
- You decide to rent a spacewith other retailers/artisans (via a lease/agreement) and you occupy the premises simultaneously or in turn/on a seasonal basis.
Example 3: A baker and a coffee roaster, a tea room and a book shop, a jeweller and a leather craftsman…
You just have to find the right people and the right location/premises for complementary offerings where each retailer benefits.
Legal details
To date, there are no provisions in place for retail joint tenancy. However, it’s easy to set up and we ordered a legal study on the topic. The law firm entrusted with the study reviewed the various options available and analysed the legislation, benefits, liability, etc. of each one.
See the table with the results of the analysis here.
Different documents will need to be prepared based on the situation. See some templates here:
Internal rules
Most importantly, joint tenancy requires that everyone get along and that everything is well organised.
It’s essential that the joint tenancy rules be defined and agreed in advance – even if you get along with each other very well and are on the same wavelength – to avoid difficult situations with both day-to-day management and when someone leaves.
We provide internal rules for this purpose.
Note that since each situation and each space is different all of the documents must be adapted, ideally with a lawyer. Ready to give joint tenancy a try?
