How to Share Retail Space in Southern California

Southern Californians are pooling their talents and inventories with shared retail space.

Sometimes coming together makes two good things better. Whether you're looking to reduce the costs of your retail operation or to find new and better avenues for product sales, sharing retail space can help everyone get ahead. Southern California is known to be a material world and is home to retailers offering everything under the sun. However, before charging forward, make sure you take care of your state and local legalities.

Instructions

1. Look for complementary businesses with which to share space. Selling similar or even completely disconnected products creates confusion for customers and often tension for business owners. A combination like nail salon and jewelry or shoes and hand-painted scarves helps round-out shoppers' experiences and make them more likely to return and recommend your businesses.

2. Check with your city or county when you decide on a co-tenant to make sure the second business is allowed in the space. For example, zoning laws in cities like Irvine and Thousand Oaks in California limit certain kinds entertainment-related businesses. Additionally, some jurisdictions might not allow subletting.

3. Allocate space in advance. If you're subletting your store to a co-tenant, figure out exactly what space you're making available and how much you want for it.

4. Write a contract that considers some of the unique elements of California landlord-tenant law. Depending on your city and county, you may have to allow for significant notice and move-out periods ranging up to several months for termination of tenancy. Specifically outline the space allotment, sharing of utility costs and any other agreements you have come to with each other. People usually go into agreements feeling things are understood and positive -- contracts are there for the worst-case scenarios no one likes to imagine.

5. License both businesses for their shared space. If the new co-tenant had a previous business license, then it might just require updating your city hall or county of an address change. New businesses need new business licenses --- particularly in the City of Los Angeles which calls it a Business Tax Certificate, and many unincorporated areas of Los Angeles County. Food-related businesses in Los Angeles County always need permits specific to selling and serving food and beverage.

6. Create clear signage to help customers find both businesses. In some situations --- such as selling baked goods on consignment in someone's coffee house, the branding can be limited to the bakery case. But in other situations such as an independent bakery operating within a supermarket, exterior signs are probably a good idea.

7. Maintain separate accounting for the two businesses even if one sells on consignment for the other. When possible, keep two registers or tills.The businesses should report their taxes to the California Franchise Tax Board separately.

References

• BNet: Long Island Business News: Sharing Retail Space with Another Shop Owner Has Advantages, Says
• City of Irvine: Zoning
• City of Thousand Oaks: Community Development Department
• Los Angeles County: Permits and Licenses
• Crowell and Moring: Enforcing Co-Tenancy Provisions in Leases Can Help Control Costs
• U.S. Department of Housing and Urban Development: Tenant Rights, Laws and Protections: California