A brick and mortar store is a physical store that can be visited in person. It may seem odd to distinguish this by describing a regular store. However, with many businesses moving completely or partially online, brick and mortar stores are no longer the default store type they once were. 

Therefore, if you’re deciding between starting an eCommerce store or a brick and mortar store, it’s good to get familiar with the advantages and disadvantages of both before you make a decision. 

In this article, we’ll explore the key differences between the two and how your legals will work for each – keep reading to learn more. 

What Is The Meaning Of Brick And Mortar?

A brick and mortar store is a shop that is situated in a real, physical location as opposed to operating solely online. Brick and mortar stores give their customers the ability to come and see their products in person, have a tangible feel for them and interact with sales representatives prior to purchasing something. 

Brick and mortar stores also allow their customers the experience of shopping, which is something online retailers cannot do. 

It’s important to keep in mind that while brick and mortar stores are physical stores, many still choose to have an online store as well. 

Advantages And Disadvantages Of Brick And Mortar Stores

There are a multitude of advantages and disadvantages to brick and mortar stores. Ultimately, the final decision will depend on what your budget, business goals and business operations are. 

We’ve summarised some of the key advantages and disadvantages of brick and mortar stores in the table below. 

Customers are given the experience of shopping. For example, grabbing a coffee while browsing stores and then having lunch at a nearby cafe can all be part of the shopping experience.  Online shopping is much more convenient and consumers have demonstrated they are receptive to the convenience of shopping from their homes. 
The potential to expand and dominate the market through franchising should a brick and mortar store enjoy success.There are additional expenses for a brick and mortar store that an online store would not have. For example, rent. 
A brick and mortar store has the option of simultaneously operating online, offering  their customers the experience of both platforms.Managing both an online and ecommerce store will demand additional resources, commitment and time.
Operating a brick and mortar store removes the risks that come with the online space, such as data breaches. It also means you don’t need to have Online Shop Terms and Conditions, Privacy Policies or Cookie Policies. Starting an ecommerce store requires significantly less effort and expenses. For example, there is no need for a Commercial Lease, fixtures, licences or permits. 

Brick And Mortar Stores Vs Online Stores

As the table above indicated, there are a number of advantages and disadvantages for both brick and mortar stores as well as online stores. As noted in the table, a brick and mortar store can still have a fully operating eCommerce store along with their physical store. Many popular department stores and grocery stores all offer this option.

Despite the fact that online stores do not have the same demands as a physical store (such as a rental agreement) there are still additional legal aspects that need to be considered prior to starting an online store. This includes: 

What Documents Do I Need For A Brick And Mortar Store?

There are a number of legal documents you will need to be able to open and operate a brick and mortar store. We’ve summarised some of the key ones to look at below. 

Do I Need A Lease Agreement For A Brick And Mortar Store?

Unless you plan on purchasing a spot outright or operating your store from a home location (check zoning regulation before doing this), you will be needing a Lease Agreement for your store. 

Your Lease Agreement should include crucial matters such as the length of the agreement, terms, rental amount, fixtures and fitting. As this will likely be a commercial lease agreement, it will differ in its terms to a regular lease agreement – we’ve got more on the later. 

Should I Have Terms And Conditions?

Terms and Conditions are often found on the websites of online stores. However, brick and mortar stores can have a terms and conditions agreement with their customers as well. 

The terms and conditions agreement essentially lets customers know what is expected of them when they enter your store. For example, social distancing  or wearing a mask. It gives you more control over who can and cannot enter the store which can aid in keeping other customers safe and minimising your liability. 

Supply Agreements For A Brick And Mortar Store

It’s good practice to look into getting a Supply Agreement with the organisations or individuals proving the product or materials your business sells.

 A Supply Agreement can cement the relationship between you and your supplier as well as protect the interest of both parties by addressing matters such as: 

  • Description of the products to be deliver 
  • Delivery date and time
  • Payment amount and method
  • Liabilities and warranties
  • Contract termination 
  • Exclusivity 

A good Supply Agreement can guarantee the quality of your goods upon arrival and set out the amount of stock you need to keep your business activities running smoothly. 

Some businesses find that holding inventory can be inefficient and costly. In this case, you may want to consider a dropshipping model – it’s always worth learning about your options when it comes to cutting costs for your business!

Franchise Agreement 

If your store starts doing well and there’s a demand for it in a different market, you could potentially expand your business operations by opening a franchise in another location. 

Starting a franchise will require seeking out a franchisee to run the other branch. This is great for your business’ visibility in the market and profitability, however, it also brings a lot of responsibility as a franchisor. 

If you want to start a franchise, it’s important to have a strong Franchise Agreement that details things like franchise royalties, pricing, fees, marketing funds and intellectual property

Employment Agreements

Running a brick and mortar store often needs multiple hands on deck. As a result, you may end up hiring staff and needing Employment Contracts

The contract between an employer and employee should detail aspects of their working relationship such as: 

  • Appropriate leave and entitlements
  • Wages or salary 
  • Hours and days to be worked 
  • Use of intellectual property
  • Obligations and duties of both parties
  • The rights of the employee and employer
  • Termination of the contract 

Do I Need A Licence Or Permit For My Brick And Mortar Store?

The licences and permits you will be required to seek will depend on the type of store you are opening. For example, a store that sells pharmaceutical items will need to seek a different permit to that of a store selling clothing. 

It’s important to be clear on the products or services your businesses will be offering and seek any relevant permits prior to opening the store. 

What Obligations Do I Have To Employees And Customers?

As a business owner, you are under a duty to take reasonable care to ensure the safety of both your employees and customers. This is otherwise known as Work Health and Safety obligations. 

Work Health And Safety Obligations

Work health and safety obligations are regulated by Safe Work Australia. They set the standards and enforce work health and safety regulations. 

As an employer, it’s important to not only be aware of the regulations that apply to your business, but also make sure they are implemented in your business activities. 

Abiding by work health and safety measures can look like: 

  • Making sure employees have the correct equipment to operate safely 
  • Getting rid of any potential hazards i.e broken glass
  • Giving ample warning about any hazards such as a sign for a freshly mopped floor 
  • Assigning a person to oversee workplace health and safety 

If any employee or customer is injured due to negligence on your behalf, you can be held liable and face legal consequences. 

Work health and safety obligations still apply even when your employees work from home, so it’s important to familiarise yourself with how this might look for your business. 

Can I Franchise My Brick And Mortar Business?

As mentioned above, if your business is performing well, you might consider opening a branch in another location – this is known as franchising

Starting a franchise means giving the franchisee everything they need to open a branch of your business in another location. However, if you’re considering simply expanding where your products are sold, then you might be looking at licensing. 

What’s The Difference Between Franchising And Licensing?

Franchising essentially gives the franchisee everything they need from the original business to open a branch. This includes  intellectual property, business operations manual, any trade secrets and other key items. 

The franchisee then has the responsibility to follow this exactly as they have been told to because they are representing the company. 

Licensing, on the other hand, simply gives another individual or organisation permission to sell your products. They don’t have access to anything from inside your business and are not considered a branch of it. 

While they seem similar, there are actually key differences between franchises and licences that you need to be aware of. 

Whichever one you choose to expand your business with depends entirely on your unique vision for your businesses as well the businesses operations.  

Do I Need A Commercial Lease For My Brick And Mortar Store?

Yes, to rent out a space for a store, you will likely need a Commercial Lease. A Commercial Lease is typically longer than a residential lease as businesses are more likely to benefit from being in the one location for longer. 

In addition to this, the terms of a Commercial Lease differ to those of a residential lease. Commercial Lease Agreements usually cover matters such as: 

  • Opening hours
  • Noise levels
  • Permitted use
  • Maintenance and repairs
  • Common areas 

Can I Sublease My Brick And Mortar Store?

Sometimes, businesses that are already under a Commercial Lease will choose to sublease the premises to a third party (usually, another business). This could benefit you in terms of earning additional profit, however, whether you are able to do this will depend on the terms set out by your landlord. 

Certain lease agreements will allow subleasing, however, the permission of the landlord is usually required. Other lease agreements strictly prohibit subletting – chat to our lawyers if you need assistance or help with your options. 

Should I Set Up A Pop Up Shop?

A pop up shop is another way to explore the benefits of being a physical location without actually committing to a lease. A pop up shop has the benefits of a brick and mortar store, except it’s only there for a temporary period of time. 

In other words, it’s a flash store. Ecommerce business owners will, at times, opt for a pop up shop to allow their customers a chance to experience their products in real time while also getting a feel for how their business does in the ‘real world’. 

If you’re thinking of setting up a pop up shop, you will still need to think about licensing, lease agreement and other legal agreements. Contact us if you would like to know more. 

Key Takeaways

A brick and mortar store is a great way to connect with customers face to face. If it’s the right kind of set up for your business, it can be very beneficial. 

However, it’s important to have all the correct legal aspects in place first – it’s always good to seek the help of a legal professional for this. To summarise what we’ve discussed: 

  • Brick and mortar stores are physical stores
  • A brick and mortar store can also have an online presence (such as a website or app) 
  • Setting up a brick and mortar store can be time heavy and resource draining, however, it also offers a real time shopping experience which is valuable to customers 
  • There are a number of legal considerations to opening a brick and mortar store, such as Commercial Lease Agreements, Employment Contracts and Workplace Health and Safety
  • A pop up store can be a good alternative for businesses that don’t want to commit long terms to a brick and mortar store  

If you would like a consultation on setting up a brick and mortar store, you can reach us at 1800 730 617 or team@sprintlaw.com.au for a free, no-obligations chat.

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