As per the recent article by ET, there are close to 400 co-working centres across the country today, compared to just 30 odd centres in 2010. These collaborative offices have seen a remarkable growth globally, but the concept is still relatively new in India; all the more gaining popularity with the start-up community pan-India.
Due to the flexibility that these centres afford, they are mostly easy to get into and have almost no exit barrier, assuming that the tenant understands what they are getting into before signing that agreement.
So, here are some of the key pointers that one should consider:
1. Security Deposit:
If you are a young entrepreneur or a start-up, chances are that renting a workspace is probably going to make the biggest dent to your pocket, not to mention the tight cash-flow that you may have to maintain. Renting almost any real estate, encompasses maintaining a security deposit where you don’t even earn any real interest on the amount, and so it is in your best interest to have it at a minimal amount. Security deposit ranges from one month to three month of rental amount, and are always Tax free.
2. Nature of Agreement:
The agreement is almost always leave & license arrangement (like booking a hotel room, as opposed to a formal lease agreement). Please note that there is a difference between Lease and ‘Leave & license’ agreement, the former includes leasehold rights within the premises, however the latter only gives a mere permission to use, however the ownership, control, and rights in relation to the cabin/proposed premises will at all times vest with the owner/lessor; However, you as a member client can utilise the services. The agreement must also clearly state the duration and the validity of a service agreement.
As a client, you are always better off in arranging an insurance of your own property & assets that you may bring in the Centre, and need not insure the premises or anyone else’s property. They will take care of it on their own. Again, It is highly recommended that the centre maintains a CCTV recording, and have a descent Access control & security installed, something that you may not find in the agreement.
4. Usage of the Property:
This is probably one of the important point, and should be laid down clearly in an agreement, mentioning the access timing of the workspace and days of the week. Additionally, agreement should clearly articulate the Internet access & usage, including policies to curb illegal downloads or infringement of copyrights/trademarks.
5. Due Dates & Notice Period:
It is always hunky dory to get into a lease agreement wishing all well, however, sometimes things don’t go your way. Hence, it is imperative to keep in mind the monthly membership due dates, usually the 1st of each month and/or any late payment charges applicable. Additionally, one should know the way out, usually serving a month’s notice period.
Remember that although there is no single silver bullet that will help you make the cut, but the above pointers will surely cover you from few potential headaches. Obviously, it is always recommended to go through the full agreement, or even better to seek a lawyer’s opinion. 🙂