The Law of Pop-Ups

In this time of shifting economic tides, storeowners often have to “hunker down” and “weather the storm” in order to end up “end up in the black.” (no more clichés). Pop-up shops (otherwise known as “flash shops”) provide entrepreneurs with a unique tool, low overhead and flexibility.

The increasingly-popular pop-up shop model allows owners to sell their goods or services during targeted periods of the year, or from trucks and vans, without having to commit to a permanent “storefront.” But while pop-up shops are able to be set up and taken down with relative ease, they shouldn’t be mistakenly treated as garage-sales or lemonade stands – they are still bound by legal regulations, and owners must comply with all applicable laws in order to maintain a smooth operation.

One of the first tasks a “pop-up” business owner must complete before opening up shop is obtaining a local business license, if one is required. Also, special permits may be required if a pop-up business sells food or alcohol. Operating without a license could subject owners to various penalties, including temporary forced closures or fines. Owners should also take care to comply with zoning laws and local ordinances, which can cover operating hours of operation.

If a pop-up shop is to temporarily reside in a permanent structure, rather than being mobile, it may require a signed lease agreement. It may be a good idea for business owners to shop around for friendly business environments, since some property owners specifically look for pop-up shops to temporarily tide them over until they’re able to find a permanent commercial tenant. As with any important contract, the terms of the agreement should be closely reviewed for any clauses that may put impossible restrictions on the business – or keep it there longer than it wants to be. This is especially true if the lease doesn’t make any explicit reference to “pop-up” business in its language.

Other types of agreements that must be addressed are for employment. Many pop-up operators prefer short-term employment positions, which are flexible enough to coincide with the business’s particular pattern of operation. But is your worker an employee or an independent contractor? Liability insurance may also need to be obtained, to protect against any “accident” that can happen. Once these details of the business plan are ironed out, owners must register their business for tax purposes (though the details of this process vary depending on the type of business organization the pop-up is). Business moves quickly; especially in the pop-up industry. The more prepared business owners are before setting up shop, the faster they’ll be “moving” toward their goals. Loree Varella, Rutgers School of Law Newark candidate for a JD degree in May 2016 collaborated with me on this blog. She is Associate Editor of the Rutgers Computer and Technology Law Journal and Managing Research Editor of that publication.