When you take commercial kitchen space, you'll be offered one of two things: a lease or a licence. They sound interchangeable, and plenty of operators sign one without being entirely sure how it differs from the other. They're not the same, and the difference shapes how long you're committed, how easily you can leave, and who's responsible for the building. It's worth understanding before you sign either.
Here's what each actually is, in plain terms, and how we use them at Karma Kitchen.
What a lease is
A lease is a legal interest in property. It gives you exclusive possession of a defined space for a fixed term, and in law it makes you the tenant of that space for the length of the agreement.
That brings real advantages. You have security of tenure: the space is yours for the term, and nobody can move you on within it. You have a stable, long-term home for the business. And for an established operation that knows what it needs, that permanence is valuable.
It also brings obligations. A lease is a longer commitment, often measured in years, and it's harder and more involved to exit early. Depending on the agreement, more of the responsibility for the space can sit with you, and traditional commercial leases end with a dilapidations liability, the cost of returning the space to the condition you found it in. A lease is a serious, longer-term commitment to a building. That's its strength when you're ready for it, and its weight when you're not.
What a licence is
A licence to occupy is permission to use a space, rather than a legal interest in the property itself. You're not becoming the long-term tenant of the building; you're being granted the right to operate from it.
That makes a licence more flexible by nature. It's typically shorter, easier to exit, and the responsibility for the building and its upkeep generally stays with the provider rather than passing to you. It's the lighter, more adaptable arrangement, designed for occupying space rather than holding property.
The trade is permanence. A licence gives you less long-term security than a lease, which is exactly what makes it suitable when you want flexibility more than you want a decade-long anchor.
The differences that actually matter to you
Stripped of the legal language, here's how the two compare on the things a food business actually cares about.
| Lease | Licence | |
| What it is | A legal interest in the property | Permission to occupy the space |
| Commitment | Longer, fixed term | Shorter, more flexible |
| Exiting early | Harder, more involved | Easier |
| Security of tenure | Strong, the space is yours for the term | Lower, by design |
| Building responsibility | More can sit with you | Generally stays with the provider |
| Best when | You want a stable long-term home | You want flexibility while you grow |
Neither is better in the abstract. A lease is the right tool when you're established and want a long-term base you control. A licence is the right tool when you're earlier on, still scaling, and value the freedom to adapt. The mistake is being put on the wrong one for where your business actually is.
How we use each at Karma Kitchen
Rather than push everyone toward a single default, we match the agreement to the size of kitchen you need, which tends to track closely with the stage your business is at.
- Smaller kitchens, under around 300 sq ft: a licence. A one-year licence for a settled smaller operation, or, for a brand-new business still testing the idea, a 90-day rolling licence so you can start producing with no long commitment while everything's still being worked out.
- Larger kitchens, 300 sq ft and up: a lease. From a minimum of two years to as long as you want it. When you're committing to serious production, you get the security and the longer horizon that suits it, with the length chosen by you rather than fixed at a standard ten.
The logic is simple: the smaller, earlier-stage operations get flexibility, and the larger, committed ones get security and a long-term home. You end up on the agreement that fits where you are, not a one-size commitment that suits the landlord more than you.
Whichever one you're on, you should be able to read it
One thing holds true across both. A lease or a licence is only as good as your ability to understand what you're agreeing to, and commercial property has a bad habit of burying the important parts in language that needs a solicitor to unpick.
We write both to be read. Plain English, the jargon cut out where it can be, and no hidden clauses, nothing lurking that you'd need a lawyer to find and a dispute to discover. The contract is where small costs and unwelcome surprises usually hide in this industry. Removing that is as much a part of a fair agreement as the terms themselves.
The bottom line
A lease gives you security and a long-term home, with the weight of a longer commitment. A licence gives you flexibility, with less permanence. Which suits you depends on where your business is, and at Karma the size of kitchen you need decides which one you're on, so you get flexibility while you're growing and security once you're ready to commit. Whichever it is, you should be able to read it without a lawyer and know exactly what you've agreed to.
Not sure which would fit your business? Talk to us and we'll walk you through it →.
