Part 4: Practices and Strategies for Pop-Up Retailing – Support Activities
Part 4: Practices and Strategies for Pop-Up Retailing – Support Activities
Chapter 13: Legal Considerations of a Pop-Up Operation
Chapter Overview
Pop-up shops are by definition a lower risk enterprise than opening a permanent retail store. Their temporary nature provides retailers with a tremendous opportunity for experimentation. Popping up in a temporary space will nevertheless entail some legal considerations, such as negotiating terms for use of the space with the landlord, obtaining adequate insurance coverage and any necessary municipal permits.
Temporary pop-up businesses thrive on being nimble and acting quickly to secure an empty location. With advance planning, a pop-up business will arrive well prepared to meet landlords and have a good grasp of what to seek in a short term rental agreement.
Learning Objectives
Upon completion of the chapter, readers will be able to:
- Distinguish types of pop-up insurance and rental agreements.
- Assess what materials to bring when pitching a pop-up to a landlord.
- Define characteristics of risk management for pop-ups.
Setting the Context
VIDEO
The following scenario helps to the set the context for considering some of the risks and legal issues for retailers and landlords in relation to operating a pop-up shop within a vacant building.
Figure 13.1 Yoga studios and other activity-based businesses need a specific type of business insurance policy
CC-BY Gay Stephenson, 2014
1. Types of Insurance Required
There are many different types of insurance available to small businesses. Liability insurance is a must for pop-up shops intending to sign rental agreements to occupy vacant retail space, as property owners generally require commercial tenants, including temporary pop-up tenants, to provide proof of this type insurance prior to opening.1 This chapter will also examine other types of insurance available for consideration, depending on a pop-up shop owner’s budget and tolerance for risk.
How should pop-up shop owners determine which other types of insurance to consider? This decision is best made by balancing the needs, risk tolerance and budget of the individual pop-up business owner or corporation, in consultation with an insurance broker. There are many business protection insurance options such as contents, business interruption, product and employer liability insurance.2
A pop-up shop business will have budget constraints, so the challenge is in balancing the bottom line and the owner’s comfort level with risk tolerance. For example, an independent sole proprietor entrepreneur testing a new business will need to decide how much insurance is reasonable and feasible. Their priorities will likely include keeping costs and insurance to the minimum; whereas for a large corporate retailer, a pop-up shop may be a sizeable investment and procuring fulsome insurance coverage will be vital to defray possible risks.
If the pop-up shop is held outdoors, the insurance needs may be different.
Table 13.1 Types o