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April 1st – Should I pay my rent?
The federal and provincial governments have presented a multitude of programs designed to help individuals, businesses and corporations during this Covid-19 confinement social distancing period. They have asked the banks to help people to defer mortgage payments, utility companies to postpone or suspend invoices and have asked landlords to be negotiable with rents, especially suggesting that residential landlords should be more lenient.
However, when it comes to the professional beauty industry, there has been no federal or provincial direct response to the issue of rent and mortgage for our industry, we are lumped with all other small businesses and left to negotiate with individual landlords, leasing corporations and real estate conglomerates, not to mention the salon and spa owners are landlords themselves. Most are left with very little leverage, but nevertheless some have managed to get temporary rent reductions, a few months off, or deferred payments added to the end of their lease, amongst other creative ideas. While many others are still trying to get their landlords to understand that business came to halt days, if not weeks, before our industry was mandated to close its doors.
The concern about how to cover rent/mortgages is one side of the coin; the other side that is never addressed in any official discussion, by the media or by any authorities is this: how are the salon owners and the chair / suite rentals professionals supposed to work out an arrangement? What is the recommended course of action? Is there one side that has more merit than the other? Should there be a winner and a loser? Is one less affected than the other? How can a win-win outcome be achieved?
The ABA position is that we are all in this together and we must be united in finding a solution that is acceptable and bearable for each and everyone. And that solution is not one-size fits all.
It is your business obligation to review all of your fixed and variable costs, negotiate with your bank, landlord and suppliers, and review all of your contractual agreements; ensure you apply for all help and relief programs that are available at all government levels and by utility services. Once you have those in hand, then calculate what is the exact total to cover for the next 3 months, then allocate it based on your pre-Covid rental revenue represented in percentage of all those added costs…this should represent what you are aiming to collect as rent from your independent workers, chair, booth, cabin, station renters. Be reasonable and show empathy the situation is difficult for everyone.
Chair / Booth / Station Renters:
You have similar responsibilities: get informed and apply for all support and relief programs you can qualify for yourself, your family and your business. Review your entire budget and figure out a realistic amount you can afford to pay for rent. It may not be as much as what your business owner has hoped for, but it is helping you and them stay afloat during these hard times. Then you can discuss how you can make up for the difference when you are both back in business. As mentioned before, the most important thing is to maintain an open and honest line of communication with your business owner. Be sensible and don’t start the conversation with an ultimatum.
A matter of solidarity.
If a salon stops paying rent to a landlord, it automatically is in breach of contract and they may face an eviction notice. Some landlords may prefer to have a space occupied collecting minimal rent than an empty space without a tenant, understanding that many of those landlords will prefer to suffer through losses for a few years to claw back some taxes from high profit years…then where is your salon going to go? Chair and Booth renters; if you don’t pay your rent, you are also in breach of contract. Your salon / barber / spa owner has all the rights to evict you, terminate your lease and ask you to sign a new agreement at higher rent upon return (and that is assuming that there is a salon to go back to).
What if the petition being circulated is successful and rents are frozen by the government?
Then this situation will be resolved on its own, but the damage done on the April 1st rent negotiation will be leaving a sour taste in many mouths and will for sure have an impact on your future relationship. Remember you will all have to work in the same place day after day once this is all said and done. Calculate, discuss, negotiate, mediate, empathize and be compassionate. Come to an agreement and shake gloved hands over it…