Things to Check Before You Sign a Managed Office Contract

Before relocating to a managed office, it is essential to understand the licence agreement, particularly since it operates differently from a conventional lease. For instance, while a leased office requires a legally binding lease, a managed office utilises a licence agreement. That is why it is vital to comprehend how licence agreements function and what to ask before signing one.

This blog post is for entrepreneurs, business owners, and office managers who need a superior understanding of licence agreements and what to ask a managed office provider.

Understanding the Terms of Your Managed Office Licence Agreement

Licence Terms and Duration

A licence agreement is provided by the managed or serviced office provider (at Regal Court Business Centre, we use both terms interchangeably). It outlines various aspects, including the duration of the agreement.

Short-term agreements may span an initial period of 1 to 3 months, followed by a brief notice period of 1 month. A long-term agreement may outline a period of 6 to 24 months. Licence durations rarely exceed 2 years.

Flexibility vs Legal Rights

In contrast to a 5-year office lease term, considerably shorter durations under ‘licences to occupy’ provide substantial flexibility for businesses uncertain about their future requirements. However, this reduced commitment does not give a ‘right to exclusive possession’. This implies that, unless agreed otherwise, businesses cannot make significant alterations to the office or building for branding and other purposes.

Licences end upon the sale of the building by the landlord, unlike office leases, which provide tenants additional rights and protections.

Essential Considerations Before You Sign

What should you ask before signing a managed office licence agreement? The adaptability of the agreement to either extend or terminate it early remains critical. Additional or concealed costs, including service charges or other expenses beyond the monthly fee, are important questions to address upfront. Avoid any surprises!

Reviewing the terms of the licence agreement, down to examining each clause, proves relevant. A licence fee may be an all-inclusive cost, or other expenses and additional charges may fall outside of it. For instance, utilities, internet access, and office maintenance, such as regular cleaning, can represent extra costs.

Costs and Payments

Initial deposits or advance payments are typically needed with a licence agreement. This could be one month or three months, depending on the type of agreement.

Some workspace providers need various one-time setup fees. This concerns phone line connections, internet access, the issuance of swipe cards for secure building access, and other related matters.

The monthly licence fee establishes the cost and what gets included in the fee. The acceptable payment methods are also confirmed.

Late payment policies outline what penalties the licensee faces. The licence agreement should also establish any long-term consequences for regular payment delays.

Office Space and Amenities Offered

The office space, layout, and size must satisfy your current and future needs. Indeed, it is possible to occupy a second office for overflow or relocate into a larger, managed office later to accommodate additional employees.

For instance, Regal Court Business Centre offers numerous serviced offices across 4 floors, with office sizes accommodating teams ranging from 1 to 25+ people, and prices starting from £637 to £8,220 + VAT per month.

An agreement may include business amenities, such as kitchen access, reception, lounge areas, boardrooms, training rooms, or meeting rooms. Several spaces remain communal, whereas others, such as meeting rooms or boardrooms, are typically bookable for an additional cost per half-day or day.

IT provision and IT support services are typically included as well. Services such as Ethernet or Wi-Fi internet provision to the office, along with related IT support services, are covered under the terms and conditions of the agreement. The internet speed may be mentioned, but outside of a fixed-speed leased line, it remains subject to the service quality assurances provided by the ISP.

Location and Accessibility

Address and Essential Services: the office location proves crucial. Staff must reach it without an overly extended commute. Is the nearby road network good or typically congested? Are there reliable public transport options? Other useful services feature high-street banks, convenience stores, and local supermarket stores.

Accessibility for Clients and Employees: are there sufficient free parking spaces available? Are there bike racks to secure a bicycle? Are there electric vehicle (EV) chargers available for people with electric vehicles? Regal Court Business Centre offers EV charging points, as well as over 100 parking spaces, including visitor parking and secure bike storage.

Neighbourhood Reputation and Safety: how safe is the area surrounding the business centre? Are security measures in place, like key fobs or swipe card systems, to prevent unauthorised building access?

Legal Considerations and Compliance

Who handles insurance responsibilities? Different types of business insurance exist, including employer liability insurance and public liability insurance. Does the licensor handle these under their insurance policy, or must the tenant secure separate insurance policies?

Business rates, special local ordinances, and other regulations may prove relevant. The licensor must clarify this to you.

Subletting policies get clarified, too. The ability to sublet part of a rented office proves rarely, if ever, an option in a licence agreement. Even with a leased office, subletting is not an automatic right.

Termination Clauses

Notice Periods – as part of the right to terminate, a notice period is required. The agreement specifies the timeframe necessary to notify the managed office provider prior to moving out. The requirements for ending the agreement must be specified.

Early Termination – it is possible under certain conditions. Penalties and other financial costs likely apply when ending a licence agreement early.

Office Condition and Restoration – the office condition and its restoration to its original state are required, per the licence. If the tenant fails to complete these, the cost of restoration work gets added to the final invoice.

Renewal Options and Conditions

The right to use and the opportunity to renew a licence agreement depend on how negotiable the agreement document proves. Some renewals may feature rental increases, such as yearly uplifts for inflation, based on the official UK CPI or RPI rates.

To support local businesses, the managed office provider typically gives access priority to existing tenants. This includes office expansion and assignment of additional amenities.

Expectations should be established regarding renewal timelines, administrative processing, and the communication of such information to the licensee.

The Regal Court Business Centre Advantage

Finding the ideal managed office solution requires careful evaluation of your provider’s comprehensive offerings. At Regal Court Business Centre, we deliver flexible workspace solutions tailored to diverse business requirements. Our newly refurbished facility on Slough High Street offers fully furnished offices for teams of 1 to 60 people, as well as meeting rooms accommodating 2 to 30 delegates. Whether you require permanent space or occasional access, our coworking options and virtual office packages offer the adaptability modern businesses demand.

Strategic location plays a crucial role in business success. Positioned just 17 minutes from London Paddington by train, with excellent motorway connections via the M4, M25, and M40, we provide seamless connectivity while maintaining competitive costs. Being only 20 miles from Central London offers the ideal balance of accessibility and affordability for growing enterprises.

What to Consider

Cost Structure and Financial Planning: evaluate providers who demonstrate complete transparency in their pricing models. Look beyond the headline monthly rate to understand what services are genuinely included and which ones incur additional charges. The most effective agreements bundle core essentials, such as utilities, high-speed internet, and basic facility maintenance, into a single predictable monthly fee. This comprehensive approach eliminates financial surprises and enables accurate budget forecasting for your business operations.

Operational Adaptability: modern businesses require workspace arrangements that can evolve with changing circumstances. Assess agreements that facilitate easy scaling without punitive terms or excessive notice periods. This encompasses your ability to expand into additional office space during growth phases, access meeting facilities on demand, or adjust service levels based on current operational needs. The optimal arrangement supports both expansion opportunities and exit flexibility should your business requirements change direction.

Additional Services and Hidden Costs

Additional services, including mail handling, printing, and access to specific office equipment, are outlined in the agreement.

Hidden costs are found within some licences in vague terms and unusual references. Clarify these to avoid unexpected expenditures. Regal Court Business Centre does not have hidden expenses in its agreements.

Service charges, which include management fees, business rates, levies, and other miscellaneous costs, are a relevant concern. These typically relate to the specific location or services used.

How does the Regal Court Business Centre’s managed office licence agreement measure up? We provide highly favourable licence rental terms for our clients. Please contact us at info@regalcourt.co.uk or 01753 910 900 to discuss your office needs and to book a tour of our business centre.