Beauty Room Rental Agreement

What is a Beauty Room Rental Agreement?

A Beauty Room Rental Agreement is a contract to rent a room in a beauty salon/spa to a freelancer, such as a beauty therapist, masseuse or cosmetic practitioner.

The freelancer is self-employed and runs their own business. As an independent contractor, they have their own clients, set their own hours and provide their own equipment. They pay a licence fee to the salon to use part of the premises.

If you have a beauty room to rent, our template has got you covered! Salon owners and freelancers can both use this contract.

Who is this Beauty Room Rental Agreement template for?

• Beauty Salons
• Nail Salons
• Tanning Salons
• Hair Salons
• Day Spas
• Massage Parlours
• Tattoo Studios
• Waxing Salons
• Laser Hair Removal Salons
• Eyebrow and Lash Bars
• Body Piercing Studios
• Dermal Therapy Clinics
• Suitable for all Australian states and territories

Do I need a contract to rent a room in a beauty salon?

Yes, we recommend using a formal contract if renting a room.

It’s essential to manage a room rental properly to protect your salon, clients and reputation.

Setting out clear guidelines in a contract will make things easier for everyone.

What does the Beauty Room Rental Agreement cover?

Our Beauty Room Rental Agreement template covers everything you need:

• Licence Fees – choose a fixed fee, a percentage of takings, or a combination of both
• Bond – a security deposit
• Term of Agreement – e.g. one year
• Permitted Use – the services they are allowed to carry out in your salon
• Access and Hours of Work – can they work whenever they want, or only during salon opening hours? Any restrictions in your lease?
• Signage – rules for signage
• Insurance – what insurance do you require the renter to have and maintain?
• Operating Expenses – are charges for cleaning, electricity and other utilities included?
• Responsibilities – use of the premises and associated obligations
• Inclusions – what does the ‘rent a room’ in the beauty salon include?
• Marketing – who is responsible for marketing costs
• Client Contacts – who owns the client database, and what happens when they leave
• Records – a record of sales (e.g. receipts) to make sure payments are correct
• Termination – how either party can terminate the agreement
• Dispute Resolution  – process to deal with disputes

How much does it cost to Rent A Room in a beauty salon?

There are a few different ways you can charge for renting a room in a salon:

1. Fixed Rent – the renter pays a set amount per day/week/month
2. Percentage Commission – the salon owner takes a cut of the renter’s total revenue from clients
3. Combination – the salon charges both fixed rent AND a percentage of income from the renter

We have included all of these options in our template. You just need to choose the one you want to use.

The actual amount you charge depends on what you negotiate and what both parties consider to be a fair amount.

How do payments get processed?

It’s best practice for freelancers to have their own payment facilities (such as a Square Card Reader or EFTPOS machine).

However, some salons agree to take payments on behalf of the freelancer and then reimburse them each week. If you do this, make sure you keep very accurate records!

How do I work out who pays for marketing?

We have included a marketing clause in the contract.

Usually, the renter is responsible for marketing their business rather than relying on the salon’s existing client database. If you have complementary businesses, you might share marketing expenses or cross-promote to clients. You could even come up with a package deal for both!

How do I make sure the renter doesn’t underpay me?

We have included a clause in the contract for record-keeping. The renter is required to keep accurate records of all sales.

You can request to see a record of sales (e.g. receipts) to make sure they are paying you the right amount. If they have been underpaying you, you can demand payment of the unpaid amounts.

If they fail to pay, you are within your rights to terminate the beauty room rental agreement.

Differences between an employee and a contractor

There’s a lot at play which is why it’s important to have an agreement in place.

Independent contractors generally:

• work for themselves and are their own boss
• are free to accept or refuse work
• control their own working times
• provide their own tools and equipment
• have no guarantee of future work

Employees generally:

• work in someone else’s business
• are subject to controls on how, where and when they do their work
• are paid a wage
• receive employee entitlements, such as sick leave and annual leave
• have the expectation of ongoing work

Any other requirements?

As an Independent Contractor, they need to have their own ABN, and they’re responsible for managing their own tax and insurance.

Further Information

For more information, visit the Fair Work Ombudsman. If you’re an employer, head to the ATO’s website to learn more about the tax and super obligations for employees and contractors and the differences between employees and contractors.

What is sham contracting?

Working on a nod and a handshake can end in disaster. Our Beauty Room Rental Agreement protects you from this headache.

Some dodgy employers create sham contracting arrangements. They’re trying to disguise an employment relationship as an independent contracting arrangement. This is usually done to avoid paying employee entitlements. Even if you make an innocent mistake, you can still be fined.

If you’re convicted of sham contracting, you could be hit with a fine of up to $12,600 as well as a back-payment of wages and entitlements.

Our Beauty Room Rental Agreement template makes it clear you and your contractor are not employer and employee. You can confidently engage a freelancer and move forward with peace of mind.