The guys end the week by talking about short-term leases for Halloween costume shops. They then answer the question, "We are planning a Halloween costume contest but I was concerned about liability. Is there anything I should prohibit or any rules I should put into place?"
NASIR: All right. Welcome to our podcast – our very scary podcast – where we cover scary business news and also answer some of your scary business legal questions that you, the listener, can send in to firstname.lastname@example.org/scary.
MATT: The Halloween Episode. It’s Halloween today.
NASIR: Oh, it’s Halloween?
MATT: I’m dressed up. You’re dressed up.
NASIR: You’re still sporting the 5 o’clock shadow which is cool.
MATT: Well, you made a big deal of the beard last week when we recorded and, after we got done, I instantly went and shaved because I hated it. Like, immediately afterwards, because I was like, well, I think you said it at every episode.
NASIR: Well, very good. Well, we get to talk about some actual real Halloween-related legal issues today which is fun.
MATT: Yeah, we’ll get to the question later. I think that one’s a pretty obvious one. I think it’s a question that every employer probably thinks about. But the story we have that’s Halloween-based, it’s something I’ve always wondered, or at least I’ve always thought about, because you’ll see these pop up and, you know, in the last few years, it’s gotten even more. It used to be maybe one, maybe two months a year. Now, it seems like it’s almost, like, four months that these businesses will be around. I’m talking about, like, the little pop-up shops, the Halloween costume stores. But, yeah, it’s these short-term leases that these businesses are going to enter into because, obviously, you’re not going to have a Halloween store that’s open year-round because I think, once November 1st hits, you’re probably not going to make many sales. So, these businesses are signing up for these short-term leases and I don’t know if there’s any specifics on how long. I would say anywhere from two to four months, probably?
MATT: Maybe four might be generous.
NASIR: Yeah, four months might be generous. I mean, I definitely saw them in September so at least 60 days or so.
NASIR: What’s interesting though, you know, pop-up leases – this is what they call them, “pop-up leases” – very familiar with this Halloween industry. But, you know, you also have other seasonal stuff and it’s great for retailers, especially, like, after the commercial leasing spaces just all opened up after 2008. This was great for landlords because it’s much better to have something there than this empty space that makes your shopping center look kind of dreary. So, it’s a great compromise in that respect. Dreary, yeah, get it.
MATT: I thought you did that intentionally.
NASIR: I didn’t.
MATT: Obviously, the model for landlords is to lock a business in long-term to an agreement, not have to worry about anything, but it’s a nice alternative if you do have that vacant space and you need someone to fill it for a few months. I mean, this is the way to go. There’s going to be some costs involved in dealing with them and getting them in and out of the space, but it’s better than just eating the rent for however many months.
NASIR: Yeah, and one of the things though that I’ve seen when we’ve done any kind of short-term leases – I haven’t done any Halloween-related pop-ups – but I think anything less than a year, right? I think one of the things that is – I don’t know if the word is “underestimated” – I should say “overlooked” is that, even though it’s a short lease, you still kind of have to approach it as if it’s any other lease in the sense that everything from how you handle utilities to additional rent to whether or not, especially in this case, if you’re only going to be there for two months, what about maintenance during that period? Whether there’s repairs that are needed inside and outside because usually long-term leases for commercial spaces, you’re responsible for the repairs inside. But what if you’re only going to be there for a couple of months? You just want to make sure that things are running correctly and it maintains that way throughout the time. For Halloween, I guess you don’t have a lot of A/C – air conditioning units – going bad, but what about heating, you know? You want your customers to be warm instead of cool.
MATT: Good tip if you’re the owner of the business and it’s a Halloween store, just look for the bigger companies that are struggling, that are going to go out of business, and then you just kind of watch them and, you know, they go out of business.
NASIR: Watch their demise.
MATT: You can kind of go, like, under the radar. Be like, “You’re out of business and you’re not making money and you’re not making money and you’re still paying rent, we’ll pay you X amount of dollars for two months to rent it out.” So, it’s kind of like a win-win.
NASIR: Oh, yeah, you could sublease it out. A lot of times, even though you would think that, the longer the lease, the less per month you pay, right? But, for these short-term leases, especially for an already vacant property, you can get some really good deals – you know, 50, 60 cents on the dollar.
MATT: It all depends on the market, right? If there’s a lot of availability, then it’s more in favor of the people looking to lease.
NASIR: And, if there’s not a lot of availability, then it’s in favor of the landlord.
MATT: I don’t think we need to explain the basics…
NASIR: Of supply and demand?
MATT: I guess it’d be… Yeah, I was going to say, “Landlord, tenant, or real estate,” but, yeah, supply and demand. They cross like an X on a graph.
NASIR: Very nice.
MATT: That was microeconomics day one, I think.
NASIR: Yeah. So, from the scary tidbit you can get from that is basically treat pop-up leases or short-term leases just as long-term leases. And, again, let me make another step sideways here to a different issue. Even a contract of small amounts of money compared to a contract with large amounts of money, those fundamental concepts are still there and, a lot of times, because sometimes a contract can have low consequence from a financial perspective in the initial beginning, then people tend to take less condition of having it reviewed by an attorney. But the problem with that is that the legal implications of liability has sometimes no relation to how much is actually at controversy at the inception of the contract. So, just the lesson of it all is treat every contract as the same. Yeah, if there’s more money involved, you may pay more attention to it, but that doesn’t mean that just because there’s less money involved that it may not have as big of a legal consequence.
MATT: Always have to make Halloween not fun.
NASIR: I know, sorry.
MATT: Tangling it up with your legal talk.
NASIR: I did try to make it scary, you know.
MATT: Oh, I think it got scary.
NASIR: So, let’s get to our question of the day.
MATT: The Halloween themed question.
NASIR: Nice. By the way, you have to ask the question in a scary way, too.
MATT: Well, I don’t have a scary voice.
NASIR: All right, fine.
MATT: Maybe Chris can do something to make my voice… I’ll read it slow so he can alter it.
“We are planning a Halloween costume contest, but I was concerned about liability. Is there anything I should prohibit or any rules I should put into place?”
NASIR: What would be best if he didn’t do anything. That was scary enough. So, yeah, the Halloween costume party contest liability concerns. You know, I’m such a downer and this is probably because I’m an attorney but I really think that having these parties in the office is kind of weird to me because it’s like, “Okay. This is the place we work,” or whatever and I just think about all the issues that could come up. but, at the same time, I understand you should have, like, very fun and open work places, but I personally don’t get into that stuff, you know? But, at the same time, when it comes to liability issues that we’re going to talk about in a second, I think it’s much more important to have a culture where everyone understands that, “Okay, Even if we’re having fun, we still have to act professionally, right?” Just because there’s decorations or we come to work, we’re in costume, in a clown outfit, doesn’t mean the work place is a joke all of a sudden either.
MATT: Yeah, and it is on a Friday this year so I feel like it’s going to be a little bit more…
MATT: Yeah, it’s always a little bit crazier. I mean, to me, a couple of things come to mind. Just be smart about it. Nothing that gives rise to any sort of sexual harassment or any sort of discrimination or anything that could put people’s safety into question. I think that’s kind of the three things I would look to.
NASIR: Yeah, those are good general rules. I mean, we can talk about specifics but, again, think about it, just make it like any other day. Have fun with it but you’re still in a workplace, especially as a supervisor or owner of your business, you still have to set the tone. Be careful with alcohol, of course, during these parties – and that goes with everything. And so, you know, make it fun but, you know, don’t go crazy about it.
MATT: Yeah, it’s hard to give any, like, specific advice.
NASIR: The question asked is, “Is there any other rules to put into place?” That makes it a little more difficult.
MATT: Maybe give some examples of what’s an inappropriate costume to wear, I guess, would be something you could let your employees know.
NASIR: Yeah, that’s true. It’s hard to say, like, “Yeah, still wear professional costumes.” But I think making general rules, nothing that’s offensive, obscene, racial in any way, or avoid, like, the hot topics. Like, every year, right? On the first week of November, we’ll see pictures of people wearing some very offensive costumes in the workplace and then someone will get sued from it. Don’t be that social media meme, you know, the first week of November.
MATT: Yeah, we’re going to see stuff, yeah, first week of November, of people that wore the wrong thing to work and ended up getting, like, fired. So, that’s always going to happen.
NASIR: But, in general, I think, if you already have an atmosphere which has a culture that is already professional, you’re not going to have that problem. But, if your business is already kind of crazy on the regular days, then that’s just going to be exaggerated and that’s really when the problems occur.
MATT: And I know we really overloaded it on the Monday episode, but there’s so many episodes of The Office that deal with pretty much what not to do on Halloween.
NASIR: Yes, there’s at least three or four Halloween episodes.
MATT: I think, last year, I believe, because there’s one from every single season. I think they showed them all in a row and I watched all of them.
NASIR: Oh, really?
MATT: It was like four hours’ worth of hilarious Office episodes. Yeah, it’s like every year would be so many terrible things to do for Halloween.
NASIR: Yeah. I mean, keep in mind too – I just thought of something – not everyone celebrates Halloween too and there may be some religious reasons for that. There was a court case in California that ended up getting dismissed because, like the Abercrombie & Fitch case, the employer successfully argued this time that the employee didn’t go through that process of religious accommodation in that aspect. But, at the same time, that employee was tricked saying, “Oh, it’s not a Halloween party. It’s a staff appreciation party,” or something like that, “where we’ll all going to dress up on the day of Halloween,” or something weird like that, right? So, be careful about those kinds of issues and – I don’t know – I guess we’ve answered this over and over again.
NASIR: But just be respectful to the other people.
MATT: It is the end of the month so, if you have to terminate someone and you haven’t decided who to fire yet, try to do it before Halloween or else you’ll end up firing someone wearing a costume.
NASIR: Which happened on what? The third or fourth episode of The Office, I believe, the first season.
MATT: One of the first episodes. It was pretty funny. Which, actually, the guy they fired, they actually brought him back, I think, the last episode.
MATT: He was on there, which was a nice call-back. What do they call that? Fan, fan fiction?
NASIR: Fan fiction? I don’t know.
MATT: There’s something like, when fans really want something to happen.
NASIR: And then, it happens.
NASIR: It think it’s called fan fiction.
MATT: Yeah, that’s what we’ll go with.
NASIR: I have no idea. All right. Well, thanks for joining us, everyone. Don’t forget to go to iTunes.com and search for “Legally Sound Smart Business” and then go to the reviews page and then rate us five stars and leave a high-level review for us.
MATT: You said iTunes.com? I was writing that down just to make sure. I’ve never heard of it.
NASIR: No, iTunes.
MATT: Have a fun and safe and smart Halloween and keep it sound and keep it smart.