Previously we examined some of the legal issues you should examine before starting a coworking space. Now we look at some of the aspects of the user agreement that you need to consider.
1. Lease or Service agreement
Be clear about the type of engagement you want with the residents — do you want to sub-lease the property to your residents or you want them to provide the co-working space experience as a service. Sub-leases involve parting with the rights on the property and would need you to have the right to sub-lease on your original agreement, while a services agreement would be restricted to the services provided.
Lease agreements generally give more rights to the lessee (and sub-lessee) with respect to the use of the property and are more difficult to terminate. License agreement on the other hand provide limited rights to the user and does not get any rights on the property. Based on the type of engagement, choose your form of agreement, but clear on the duration of the agreement.
2. Minimum Level of services
A co-working space is more than just the providing some quality workspace. Make sure your agreement includes the details of the number of seats, internet speed, download limits, access to the meeting room etc. Disputes with the users normally arise with respect to additional users, temporary interns etc, so it’s better to have it all covered up front. The users do expect that you will comply by your promises and be prepared to have back up plans to keep your users satisfied. Some users may demand penal clauses for non-compliance of any of the terms, so negotiate hard.
It’s all about money, honey! Whether you accept payments via cash, online transfers or via bitcoins, be specific about the charges. If you charge more for high speed internet, or for video conferencing put it in the agreement. Taxes may change over time, so ensure that agreement points it out clearly. If you intend to increase prices periodically, then the agreement should clearly spell out how much and when the escalation will kick in. You can find details of price and amenities on Sneed.
4. Code of conduct
This is a tricky one. People from diverse backgrounds will be working together at your co-working space — different types of businesses, work timing, client visits etc will mean that you will need to set some type of Do’s and Don’ts to everybody their individual space. As the service provider, you may be the person adjudicating on certain small matters, but then there are those that are illegal and requires immediate action — Racist slur, harassment, threatening behavior etc. These are core values around which the co-working space is built and you need to communicate it firmly to the users that violating these would not be tolerated.
Disasters can strike despite our best efforts, and thankfully there is one way to compensate for any losses that we may suffer — insurance. As a space partner you can insure the assets that you own, but what about the assets brought in the user? If your insurance policy covers all these assets, great, but generally, you would expect them to get their own insurance on their assets. You can facilitate them to get an insurance easily and they would appreciate you for that, but be clear as to your liability in case of any damages due to electrical surge, theft etc. One never hopes to call in the insurance company, but if you have the right policy, at least you can still call them.
6. Breakaway / Termination
When nothing works, terminate the agreement. While most co-workers will break away for reasons other than being unhappy with your services, the agreement needs to codify the terms of termination and the duties and responsibilities of each party when that happens. So typically, you may want to cover issues like the lock-in period before which an agreement cannot be terminated, notice period, treatment of deposit etc. Sure, no one ever wants to read these clauses or wants the other the point to a clause stated here, but your agreement should still have them all.
As the owner of a co-working space, this is the most essential agreement you will sign, so it makes sense to invest a fair amount of time, effort and money to frame the right template. And yes, be aware that the agreement that you sign with each client may differ slightly and you will need to have good way of tracking them. Happy Co-working!
Disclaimer: This blog is for information purposes only and does not constitute legal advise. Service agreements may require you to weigh in multiple factors and you should be drafter with due professional oversight.