What is a Beauty Salon Room Rental Agreement?
A Beauty Salon Room Rental Agreement is a contract to rent a room in a beauty salon/spa to a freelancer, such as a beauty therapist, masseuse or cosmetic practitioner.
The freelancer is self-employed and runs their own business. As an independent contractor, they have their own clients, set their own hours and provide their own equipment. They pay a Licence Fee to the salon in exchange for use of the premises.
If you have a beauty room to rent, our template has you covered!
Do I need a contract to rent a room in a beauty salon?
Yes, we definitely recommend you use a proper contract if you’re renting out a room.
It’s really important to manage a room rental properly so that you protect your salon, your clients and your reputation.
Fair Work conducts inspections into Rent A Room arrangements on a regular basis to make sure that they aren’t sham contracting arrangements. Sham contracting is hiring someone as a contractor when they should be an employee. If you’re convicted of sham contracting, you could be hit with a fine of up to $12,600.
Setting out clear guidelines in a contract will make things easier for you, and your freelancers.
We recommend you also download and keep a copy of this fact sheet from Fair Work before you get started so you understand the key differences between an independent contractor and an employee.
What does the Beauty Salon Room Rental Agreement cover?
Our Beauty Salon Room Rental Agreement template includes:
★ Licence Fees – will you charge a fixed Licence Fee (weekly/monthly), a percentage of takings, or a combination of both?
★ Bond – the amount you will charge as a security deposit
★ Term of Agreement – e.g. 1 year
★ Permitted Use – the services they are allowed to carry out at your salon
★ Access and Hours of Work – can they work whenever they want, or only during your salon opening hours? Any restrictions in your lease?
★ Signage – rules for signage
★ Insurance – what insurances do you require the contractor to have and maintain?
★ Operating Expenses – are charges for cleaning, electricity and other utilities included?
★ Responsibilities – use of the premises and associated obligations
★ Inclusions – what does the ‘rent a room’ in the beauty salon include?
★ Marketing – normally the renter is responsible for marketing their own business, rather than relying on the salon’s existing client database
★ Client Contacts – who owns the client database, and what happens when they leave
★ Records – record of sales (e.g. receipts) to make sure they are paying you the right amount
★ Termination – how can either party terminate the agreement?
★ Dispute Resolution – process to deal with disputes
How much does it cost to Rent A Room in a beauty salon?
There a few different ways you can charge for renting a room in a salon:
- Fixed Rent – the renter pays a set amount per day/week/month
- Percentage Commission – the salon owner takes a cut of the renter’s total revenue from clients
- Combination – the salon charges both fixed rent AND a percentage of revenue from the renter
We have included all of these options in our template. You just need to choose the one you want to use.
The actual amount you charge depends on what you negotiate and what both parties consider to be a fair amount which you agree on.
How do payments get processed?
A freelancer should always have their own payment facilities to take payments directly (such as a Square Card Reader or EFTPOS machine).
From a legal point of view, it’s important to have separate bank accounts and payment records.
Can I customise the inclusions?
Yes you can. We have included a checkbox format for inclusions so you can mark what is included in your agreement and add any extras if you need to.
How do I work out who pays for marketing?
We have included a marketing clause in the contract.
Normally the renter is responsible for marketing their own business, rather than relying on the salon’s existing client database. If you have complimentary businesses, you might decide to share marketing expenses or cross-promote to clients. You could even come up with a package deal for both!
How do I make sure the renter doesn’t underpay me?
We have included a clause in the contract for record-keeping. The renter is required to keep accurate records of all sales.
You can request to see a record of sales (e.g. receipts) to make sure they are paying you the right amount. If they have been underpaying you, you can demand payment of the unpaid amounts.
If they fail to pay, you are within your rights to terminate the beauty room rental agreement.
Can I use this template for a Rent A Chair arrangement?
This template is suitable for a beauty room to rent in beauty salons, nail salons, tanning salons, hair salons, day spas, massage parlours and tattoo studios.
If you want to rent out a chair or booth in your salon or barber shop, we have a separate Rent A Chair Agreement template for sale in our Shop.
Pros and Cons
The pros – as a salon owner, you can save money by not having to pay employee entitlements such as sick leave, annual leave, maternity leave or superannuation. In fact, they pay YOU to be in your salon…
If things don’t work out, it can also be easier to terminate the agreement (although this will depend on your individual circumstances).
The cons – It is important to remember that your Independent Contractor, at the end of the day, is running THEIR own business. They may be competing with your salon, and you have little control over their actions because they don’t work for you!
Even though they don’t work for you directly, their appearance, professionalism and quality of work still reflect on you because they are working out of your salon space.
Is this only for Beauty Salons?
This template is perfect for any of these businesses where the owner wants to ‘Rent A Room’:
★ Nail Salons
★ Tanning Salons
★ Hair Salons
★ Day Spas
★ Massage Parlours
★ Tattoo Studios.
★ Waxing Salons
★ Laser Hair Removal Salons
★ Eyebrow and Lash Bars
★ Body Piercing Studios
★ Dermal Therapy Clinics
Differences between an employee and a contractor
Whether you are an employee or a contractor depends on many different factors.
Independent contractors generally:
🔹 work for themselves and are their own boss
🔹 are free to accept or refuse work
🔹 control their own working times
🔹 provide their own tools and equipment
Employees generally:
🔸 work in someone else’s business
🔸 are subject to controls on how, where and when they do their work
🔸 are paid a wage
🔸 receive employee entitlements, such as sick and annual leave
Any other requirements?
Contractors are self-employed individuals or companies. To legally operate as a contractor in Australia you need to register for a Tax File Number (TFN), Australian Business Number (ABN) and in certain circumstances you need to register for Goods and Services Tax (GST).
Still not sure about the difference?
We recommend you visit the Fair Work Ombudsman website to read more. If you’re an employer, visit the ATO’s website to learn the tax and super obligations for both employees and contractors, and read more about the differences between them.
What is sham contracting?
A sham contracting arrangement is when an employer attempts to disguise an employment relationship as an independent contracting arrangement. This is usually done to avoid paying employee entitlements. Even if you make an innocent mistake, you can still be fined!
If you’re convicted of sham contracting, you could be hit with a fine of up to $12,600 as well as back-payment of wages and entitlements.
This agreement makes it crystal clear that you have a true Independent Contractor arrangement.
Is this Beauty Salon Room Rental Agreement template legally binding?
Absolutely!
All of our templates have been drafted by qualified Australian lawyers who hold an Australian legal practicing certificate.
We are affiliated with a commercial law firm based in Sydney.
