When a ‘rent-a-chair’ arrangement is the perfect solution.

By On Your Terms co-founder Natalie Fennell
Dec 2023

If you’re a business owner with a salon/clinic/studio and want to maximise income from your space, or a freelancer needing a location for your business but not the high overhead of a lease, a ‘rent-a-chair’ arrangement could be the ideal option. This blog delves into the benefits of a ‘rent-a-chair’ arrangement and why it’s crucial to document the arrangement in a written agreement.

What is a Rent-a-Chair arrangement?

Under a Rent-a-Chair arrangement, a salon, clinic, or other business owner permits a freelance stylist/technician/other professional to use a room, chair or booth in their premises to operate its business. Importantly, the freelancer carries out its own business and is not an employee of the salon/clinic.

Arrangements vary and the freelancer’s fee could be a fixed fee, a percentage of the freelancer’s earnings, or a combination of both. Generally, the freelancer provides its own equipment and supplies, but the salon/clinic may also provide certain equipment or facilities. Marketing could be collaborative or separate, and the freelancer may or may not keep its own client list.  

Key tip: Renting a separate room to a freelancer (as opposed to just a chair or booth within your space) might be considered ‘subleasing’ under your lease, which typically requires prior written approval from your landlord. Check the terms of your lease before you commit to anything.

Who’s it for?  

Although typically associated with the hair and beauty industry, this innovative and flexible arrangement can be used in other industries where different businesses can provide services from a shared space such as in the health and wellbeing, photography and fitness industries. 

Hair and Beauty industry

Rent-a-Chair arrangements have long been a staple in the hair and beauty industry. Hairstylists, barbers, nail technicians, tattoo artists, tanning salons, massage parlours, brow and lash bars, hair removal clinics…basically any beauty business can benefit from renting space within their salon/clinic to another beauty professional offering their services.

This arrangement provides beauty professionals with the autonomy to manage their schedules and clientele while allowing salon owners to maximise revenue from unused spaces. Also, beauty biz owners can add new services without the cost or other resources required to hire and train new employees.

Other industries

The Rent-a-Chair model has also been successful in other industries and its popularity is growing as traditional employment models are giving way to more flexible arrangements. Such other industries include:

• Health and wellbeing: Practitioners such as physiotherapists, chiropractors, osteopaths, massage therapists and acupuncturists may rent space within a larger clinic. This not only optimises the use of clinic facilities but also fosters collaboration among healthcare professionals.
• Fitness: Independent personal trainers, Pilates and yoga instructors may rent studio space within a gym or fitness centre allowing them to offer their services in a well-equipped environment without the financial burden of owning or leasing a dedicated studio or gym.
• Photography: Freelance photographers may rent studio space equipped with backdrops and lighting equipment from photography studios.

What are the benefits of a Rent-a-chair arrangement?

Across all these diverse industries, Rent-a-Chair arrangements offer many benefits:

• Cost-effective and efficient for salon/clinic owners: By renting out empty chairs or workspaces to contractors, a salon/clinic can ensure every square metre of their space is generating revenue without the long-term commitment, responsibility and (often) headache of traditional employment. This revenue maximisation can significantly contribute to the salon/clinic’s financial stability and growth.
• Flexibility and autonomy: Contractors enjoy the freedom to manage their schedules, clientele, and business operations independently.
• Collaboration opportunities: The arrangement can foster collaboration and networking within the salon/clinic as well as opportunities for cross referrals.
• Cost-effective for contractors: Professionals can set up and grow their business without the upfront cost, time and energy of setting up their own salon/clinic/studio.

Why you need a Rent-a-Chair Agreement

To protect your salon/clinic or studio, your clients and your reputation, it is essential to clearly document your specific arrangement in a Rent-a-Chair Agreement (also known as a salon booth rental agreement or salon licence agreement in the hair and beauty industry).

Having a written agreement means both sides are on the same page on all the key terms of the relationship. This includes duration, fee, bond, outgoings and utility charges, equipment/shared facilities provided by the salon/clinic/studio, business hours, marketing, access to client info, booking and payment systems, any licences or insurance required, termination provisions to end the arrangement.

Also, importantly for the salon/clinic/studio, a Rent-a-Chair Agreement can include whether non-competition or non-solicitation restraints apply (to stop the freelancer from taking clients or employees away or setting up in competition when the arrangement ends).

Having a clear written agreement also provides good evidence of the intention to establish a contractor relationship not an employer-employee relationship. If the IRD interprets the arrangement as an employer-employee relationship the salon/clinic/studio owner would be required to pay the contractor all employment entitlements such as annual leave, sick leave etc. Click here to read more about why the distinction is important.

Key points

Rent-a-Chair Agreements are a win-win for salon/clinic/studio owners and independent professionals not only in the hair and beauty industry but also other industries, such as health and wellbeing, photography, and fitness. They offer legal certainty and protection, flexibility, and collaboration opportunities.

Whether you're a business owner looking to boost your revenue or a contractor seeking independence and autonomy without large overheads, a simple, easy-to-understand Rent-a-Chair Contractor Agreement (Hair and Beauty Industry) or Rent-a-Chair Contractor Agreement (All Industries) from On Your Terms is a vital tool to achieve your goals.

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