Relationship to Host Site
Chances are, a farmers market doesn’t own the property where it operates. More likely, it rents or leases space from a business, individual, or government entity. Some farmers markets have formal written agreements or leases in place and others rely on a verbal understanding.
Either way, using rented or leased property can present risks for the farmers market:
- Farmers markets and landowners may disagree about responsibility for cleanup, safety, traffic, or other concerns. (For an example of how this type of disagreement complicated a slip and fall lawsuit against a farmers market, read the Capital City case study.)
- The landowner may decide to make the property available to someone else, start construction, change the layout, or otherwise make it difficult for the farmers market to operate.
- The farmers market and landowner may run into disagreements about when the market may operate, for how long, and on what days.
These risks can be managed effectively with the risk management resources addressed in this toolkit: insurance, governance, market rules and procedures, and recordkeeping.How to Manage This Risk
Risk Management Tools
When it comes to relationships with host sites, the most important record to keep is the one that gives permission to be on the site. This record can be one of the following:
- rental agreement
Each of these are ways to receive permission to be on someone else’s property. To learn more about Recordkeeping as a risk management tool, click here.
A business structure is one of the most basic tools to limit liability. An LLC, corporation, nonprofit corporation, or cooperative can insulate market owners’ personal assets from business liabilities. For example, if a market organized as an LLC fails to pay rent, the host site can only seek the assets of the LLC in return for the debt. The host site can’t seek the assets of the individual people who own the LLC (absent fraud and other extraordinary circumstances). In terms of internal governance, any business structure should have a procedure for reviewing and approving leases, rental agreements, and licenses. These agreements are vital to the stability and continuity of a farmers market. As such, owners and important stakeholders should monitor them to ensure the market’s interests are protected.
To learn more about Governance as a risk management tool, click here.
Commercial general liability (CGL) insurance is an essential risk management strategy for any market. Insurance generally covers the market for injuries and property damage that result from the farmers market’s use of and responsibility for the market site. In all likelihood, the market’s agreement with the landowner will require that the farmers market carry insurance for both liability and property damage that occur as a result of the farmers market’s use of the property. Markets can always consider asking the host site to add the farmers market to the host site’s insurance policy too. (However, site hosts may resist because their premium will go up.) Markets, in turn, usually require that vendors carry general liability insurance themselves (which is a cost to the vendor), and the agreement with the landowner may require that vendors also carry a policy.
A market should ask its insurance agent if there are any special considerations based on the market’s relationship to its site owner. It should tell the insurance agent whether there’s a lease or license and whether the landowner is indemnified for any circumstances, as the farmers market will need coverage for indemnification. Generally, the coverage will be the same, but markets that own the property where market events are held may have higher rates based on their increased risk exposure (that is, the chance that they will be determined responsible in the event of an accident). If the market rents from another entity, it may find that public entities (like city governments, for example), require a higher limit on the insurance policy than private entities do. If a market is considering changing where it holds market day, it should ask questions about this.
To learn more about Insurance as a risk management tool, click here.
Market Rules and Procedures
Market rules are an important way to ensure the farmers market’s obligations to landowners are met. For example, the landowner may prohibit animals or parking in certain areas. In almost all circumstances, if a vendor breaks those rules, it’s the same as if the farmers market itself broke the rules. The farmers market will need to make sure vendors also know that animals and parking in certain areas are prohibited. And the farmers market will need to enforce those rules. Otherwise, the farmers market risks violating its agreement with the landowner.
To learn about dispute resolution, click here.
To learn more generally about Market Rules and Procedures as a risk management tool, click here.