Right of First Refusal Agreements

[Me]

Worst Case Scenario: You enter into a floor rental agreement with a yoga studio, and though months of diligent work, you build a Zumba client base. Lo and behold, another Zumba instructor comes along and wants to teach there, too. Only, they don't ask you; they go to the owner of the yoga studio and negotiate. The owner of the yoga studio enters into a rental agreement with the other instructor, and the instructor sets up shop in that studio, teaching classes at half the price that you charge. Suddenly, all of the work you have done to promote that venue as a nice place for Zumba is being “piggy backed” by another instructor, and they are using predatory pricing.

It is my understanding that this type of hypothetical situation can be discouraged if a “right of first refusal” agreement is established with the yoga studio.

I was hoping that some professional dance instructors here could let me know if this is effective. (Please no specific details about businesses or people!) I would appreciate a PM if you do not want to post openly.

Just to be clear, I am not seeking legal advice. I’m trying to determine if this type of agreement is effective or even realistic. This will help me decide to take the next step, which would be a visit to an attorney. I’m pretty sure the local attorneys aren’t going to be able to help me know, specific to the dance world, how these agreements work, BUT an attorney can certainly help with drafting the agreement.

For the curious - I am not currently having problems, but I am interested in branching out, and I need to protect myself.

Thank you!

[Chris Stratton]

My recommendation would be to try to build your own "brand" distinct from the venue - have class resources on your own website, your own business cards and phone number, you rather than the venue have student contact info to announce schedule changes, etc.

That also makes your business portable if you need to move it elsewhere for your own reasons.

[Larinda McRaven]

It is the studios space to rent out as they see fit, and make money.

So welcome to the world of amateurs teaching next to pros for half price, and devaluing the price of a lesson. Suck it up and try to be better than the other and worth a bigger price tag.

[Me]

L.O.L.!

I figured as much.

I know that an attorney would be more than happy to take my money and draft a pretty piece of paper. But, would it work? I knew I could get my answer here. :)

[Linda J Schlensker]

It is the studios space to rent out as they see fit, and make money.

So welcome to the world of amateurs teaching next to pros for half price, and devaluing the price of a lesson. Suck it up and try to be better than the other and worth a bigger price tag.

I have done this as part of my lease agreement with a shopping center we once used. He was not to lease to another dance studio in the same strip mall. What made it work was the agreement, that should he choose to do so, I was no longer required to finish out the terms of my lease with him. No penalties for early termination. There are lots of creative ways to write contracts. It is an agreement between the parties of what we agree to do and what happens if someone breaks the agreement. What happens should one party violate terms of the agreement is what keeps us out of courts. I would have some kind of written contractual agreement with anyone. If they have a printed contract they use as a standard, write in your own riders after working out the specific items of concern to you. Both parties initial those riders before signing. I agree with the above comment that some times we have to suck it up. Students figure out pretty quick who is giving them better service and what it is worth.

[LindyKeya]

I'd shoot for a combination of things: market the classes as "{Me's Company Name} Zumba classes" (with a note in your advertising that they're at {Studio Name}), plus an agreement up front that protects you, insofar as that is possible. Some won't go for, but some will.
The branding really is key here though.

[3wishes]

Me, LJS has a sound lesson learned. In Calif. regardless of business, if you rent you can ask the facility owner via negotiation - right of first refusal, or sublease (split the space) and guarantee it is not the same style of business therefore avoids conflict and gets you or them out of legal entanglements. Also, do as much independent business work as Chris suggested. Find other venues that need to rent their space say for one night, two days a week where the floor is empty. Always have a plan "b".

[wooh]

You can write into a contract lots of such things. Can you enforce them? That's going to be up to your local laws. Sometimes even if you can't enforce it, you can write it into your contract in the hopes that the other person will be too scared to try it (for example, super strict non-competes that studios put in their instructor contracts.)
But it's really ALL going to depend on your local legal landscape.
Like Larinda said though, your best bet is going to be to brand yourself. Make sure what you have to offer is worth a bit of loyalty. And remember that those that try to profit off of someone else's hard work usually end up with karma biting them in the butt. :)

[DL]

It seems to me that contracts are most often useful when combined with good will in the "good fences make good neighbors" sense, rather than employed in the "compel another to behave as desired" sense.