E-cigarette sales continue to soar. Many have chosen to set up specialist shops selling e-cigs and associated paraphernalia.
As a result, in the past year or two I’ve advised lots of budding entrepreneurs looking to open one of these shops, and I found that some issues kept cropping up, in particular when discussing the shop leases. So, I’ve drawn up a special list of pointers for anyone thinking of setting up an e-cig shop.
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Planning Consent – Change of Use & Works
You may need planning permission from the Council to use the property as an e-cigarette shop. If so, you’ll probably need to obtain permission for retail use, which is under use class A1. As a starting point, ask the property owner what the current use is or give the council’s planning department a call.
You may well not need planning consent for any fit out works you intend to carry out. Many e-cigarette shop owners don’t carry out more than minor non-structural internal works. That said, e-cigarette shops sometimes have more imaginative signage (e.g. neon lights or banners), for which planning consent may well be needed. I can advise on the law relating to e-cigarette shop planning consent.
Break Clauses
Many e-cigarette shop owners are starting a new venture. Although, there appears to be a growing demand for e-cigarettes, there is always the uncertainty that the business might not take off in the location they’ve chosen, no matter how promising the prospects. It’s therefore crucial to make sure that you include a right to break the lease early on. That way, if things do look bleak, there is a way out rather than having to pay the rent until the end of the lease.
Limited Company
It’s usually a good idea to create a company to be the tenant under the lease. That way, if business does not go well, at least the landlord should not be able to sue you personally. If you’re using a company to ring fence your liabilities it also makes sense to ensure that you do not personally guarantee that the company tenant will honour the terms of the lease. If the landlord insists on a guarantee, try to keep him quiet by offering a rent deposit (or if a deposit has already been offered, increasing the deposit amount).
Security of Tenure
If all goes well, you’re probably hoping that your e-cigarette shop will become an established part of the community. People will become used to your location. If so, then you probably don’t want the Landlord kicking you out on a whim at the end of your lease. You should therefore make sure the lease is a protected tenancy under the Landlord and Tenant Act 1954. This means that, at the end of your lease, you would have a right to a new lease on similar terms as the old one, and the Landlord would only be entitled to refuse to grant the new lease to you if he could prove one of a limited number of grounds (e.g. he wants to redevelop the property or use it for his own business).
The above are only a slim selection of important points to consider before signing a lease for an e-cigarette shop. If you give them some serious thought, though, they could save you some serious headaches.
As usual, all the usual trips and traps that come with commercial leases will also apply to your lease, so make sure you get some proper advice before you sign.
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