Licensing Your First Coworking Space
Get the right legal framework in place to license your coworking space with confidence and precision.
Coworking Space vs. Commercial Lease What New Business Owners Need to Know
Coworking spaces offer an attractive solution for freelancers, startups, and small business owners, providing flexibility and cost-effectiveness compared to traditional office rentals. However, before committing to a coworking space, it is essential to consider the potential drawbacks compared to a conventional commercial lease—This article explores the differences and identifies some terms to look for when comparing offers.
What's the Difference Between a Lease and a License
A coworking space is rented with a license instead of a lease. A lease is an exclusive right to possess including the right to keep others, including the landlord. A license, by comparison, is a nonexclusive right to use. Licenses may also be revocable while leases are usually for fixed terms.
In the Context of Licenses for Coworking Spaces, Consider the Below
1. Non-Exclusive Use
A business shares facilities with other businesses, communal areas, and amenities may be managed by the landlord.
2. Short-Term Commitment
Coworking licenses can be short-term, even month—to-month, which gives flexibility to change workspace as needed.
3. Limited Legal Protections
Licensing offers less legal protection than leasing. Providers can usually change licensed space and amenities anytime. Licenses are also usually personal and non-transferable, which can be a drawback for businesses considering sale or assignment.
4. Stability and Security
Commercial leases are intended for long-term tenancies, often including stepped rent and renewal options for added security to the tenant beyond the first lease year. Tenants also enjoy commercial tenancy rights while licensees do not.
Key Considerations for Your First Coworking Space License
Usage Rights
Pay attention to which areas of the coworking space a license entitles access to, including communal areas, meeting rooms, and other shared facilities. Clarifying these rights upfront can prevent surprises later. Where access is later changed, this can sometimes also be a basis for demanding lower rental fees.
Renewal Terms
Plan for license renewals by discussing the renewal terms and conditions before signing. While stepped rent and renewal options are less likely to be available, sometimes longer initial terms are available by negotiation.
Service Level Agreements (SLAs)
These are contract terms between a service provider and a customer that define expected levels of service. Things like performance standards, response times, uptime guarantees, and penalties for not meeting agreed-upon standards can all be accounted for. In the coworking context, be sure to ask about things like after-hours access, receptionist schedules, and when the HVAC will be run.
Networking Opportunities
Coworking spaces offer networking opportunities. Join community events to expand your business connections. Explore the provider's community events to enhance your business connections.
Disclaimer
This article is provided for informational, educational, and marketing purposes only and does not constitute legal advice. The content is current as of its publication or last review and may not reflect the latest legal developments. Do not rely solely on this information—consult a qualified attorney regarding your specific situation.
Making the Right Choice for Your Business
At Cascade Counsel, we recognize the importance of choosing the right workspace for new business owners and freelancers. Licensing a coworking space can offer cost savings and flexibility, but it is important to understand its limitations and ensure the agreement aligns with your business goals. We offer tailored guidance to help you navigate the complexities of coworking licenses, whether you are reviewing or renewing. Our goal is to support your business success so you can focus on what matters most.
