You’ve seen them at the mall and in your favorite commercial outlets. Pop up shops, the stores that used to be regional and holiday focused are now becoming the next big trend in this space. It gives new and upcoming retailers a way to showcase brands and even test appeal.
Now, short-term leases are becoming more common across many types of businesses.
When setting up pop up stores, pop up restaurants are essentially engaging in a short-term commercial lease in Arizona, and there are several legal considerations to keep in mind. While specific requirements may vary, depending on the jurisdiction and type of establishment, here are the most important things to know about short term leases in Arizona.
Permits and Licenses Are Usually Required
Start by making sure that you have obtained any of the necessary permits and or licenses that will be typically required to operate your pop-up store or restaurant. This may include business licenses, food service permits, health and safety permits, liquor licenses (if applicable) and any specific permits for temporary or mobile businesses.
The Arizona Department of Revenue (ADOR) has published a guide to tax and licensing compliance with all necessary information.
At minimum, pop up business owners should be prepared to register with ADOR and obtain the following licenses:
- Transaction Privilege Tax License
- Employer Identification Number (EIN)
- Regulatory (Professional/Special) Licensing/Permits
- Local Business/Occupational License/Permit(s)
Not every type of Arizona business requires licenses and permits, but there are significant penalties for operating without necessary licenses. Be sure to confer with qualified legal counsel in advance to assure that you are abiding by the current laws and regulations that are in place.
Lease Agreements Determine When/How Your Pop-up Operates
Spend time reviewing and also trying to negotiate the lease agreement carefully before you sign or agree to anything. You’ll want to make sure you consider aspects such as the duration of the lease, any rental terms, the liability provisions, insurance requirements and any possible restrictions on the use of the space that may apply. Commercial leases, in particular, often have broader use provisions, which provide clarity on the permissible activities on a property. These are designed with transparency in mind as well as serving to protect property values and facilitate a harmonious landlord-tenant relationship by setting clear expectations for both parties.
It’s important to have a clear understanding of the terms and conditions before signing the lease, no matter how long your business plans to operate.
Zoning and Land Use Regulations Can Impact Your Operations
Verify that the location you intend to use for your pop up store or restaurant is zoned for commercial activities. Check local zoning regulations to ensure compliance with permitted land uses, occupancy limits, parking requirements, and signage restrictions.
This typically is not an issue with pop up shops in Arizona, as established brick-and-mortar businesses tend to share their space with temporary stores and restaurants. As such, this means that general commercial activities are already allowed within these zones, so opening a pop up business is a more seamless process.
Complying with Health and Safety Regulations
Research the industry your pop up will be registered under and take the time to research any health and safety regulations that currently exist. This includes proper food handling and storage practices, fire safety measures, accessibility requirements, and adherence to building codes. Health inspections and permits may be necessary for food-related businesses.
Insurance Coverage Will Vary
You’re going to also need the appropriate insurance coverage to protect your business and mitigate potential risks. Make sure to review your options with general liability insurance, property insurance, product liability insurance (for restaurants), and workers’ compensation insurance (if you have employees). The specific coverage needed will depend on the nature of your business.
Per Arizona state law, all businesses with at least one employee are required to carry worker’s compensation insurance with the exception of independent contractors and domestic workers. Though other types of insurance are not legally required, most businesses carry policies that can help them limit liabilities.
Using Intellectual Property Rights Requires Permissions
If you plan to use trademarks, logos, or copyrighted materials in your pop up store or restaurant, ensure that you have the necessary permissions or licenses to use those assets. The U.S. Copyright Office offers automatic protection for any published works, and any copyrighted work cannot be duplicated or used as the basis for new work without the permission of the original owner. Be mindful of potential infringement issues and protect your own intellectual property, if applicable.
Consult with an Experienced Arizona Real Estate Attorney
It’s important to consult with a local attorney who specializes in business and commercial law to ensure compliance with all applicable laws, regulations and local requirements specific to your jurisdiction before engaging in any short-term commercial lease in Arizona.
Gottlieb Law has significant experiences with commercial real estate in Arizona and can assist you and your business with any short- or long-term endeavors. Contact us today at 602-899-8188 to schedule an initial consultation or make an appointment online.