Business Law Articles
Ynze Kliphuis, LL.M.
Russell Advocaten B.V.
Are you planning to enter into a shop-in-shop agreement? This is what you should keep in mind.
The term “shop-in-shop” can be taken literally. It is actually a store within a store. A large retail shop or department store makes available part of the store to another shop. The other shop is allowed to exploit its brand in this particular part of the store. This formula is getting more and more popular and, for instance, Debenhams and the Dutch department store De Bijenkorf are typical examples of large (host) stores making increasing use of shop-in-shop concepts.
Different shop-in-shop arrangements
There are different kinds of shop-in-shop arrangements, such as concession, operating, co-operation and lease agreement. Mostly, the latter is chosen, where part of the store is (sub-) leased to the shop-in-shop keeper
Arrangements included in the shop-in-shop agreement
Lots of things are involved when entering into a shop-in-shop agreement. Not only the usual arrangements regarding, for instance, usage fee/lease, duration of the agreement and how the cooperation must be terminated will have to be considered. The host store and the shop-in-shop keeper would be well-advised to make agreements in writing on the following:
- Design: Does the operator decorate the shop or is it done by the host store and do the concepts have to be brought in line? How often will the decoration change? Who pays for the design/decoration and periodic changes made to it?
- Personnel: Does the operator employ staff, or will this be the responsibility of the host store? Who is liable for the performance and safety of the employees?
- Maintenance: Who maintains the shop-in-shop area? Who is liable for defects of this area or near it?
- Payment: How will the shop-in-shop products be paid?
- Competition: To what extent is the host store allowed establishing competitors of the shop-in-shop in other parts of the retail building? What exactly will be regarded as competition?
- Intention: What can the operator do with the part of the store made available? Is the shop-in-shop keeper allowed to determine his own product range or does he have to bring it into line with interests of the host store?
In case of shop-in-shop one may think of a clothes shop within a clothes shop or department store. In a large retail area often the different functions of retail, catering, service, and culture are combined. This way there will not just be “shop-in-shops” but also, for instance, “restaurant-in-shops”.
However, not all functions can be combined just like that. Both the lessee and the lessor have to take into account the regulations concerning blurring.
Would you like to learn more about shop-in-shop and what you have to keep in mind for the purpose of a shop-in-shop concept? Please contact us. We will gladly assist you!