Do I need a Sale of Business Agreement when selling a retail business?

Are you looking at selling a retail business? The sale of a brick-and-mortar store is often the culmination of years of hard work on the part of the vendor and presents the perfect opportunity to reap the rewards of the goodwill in the business. To avoid jeopardising your chances of ‘cashing in’ on the sale, it is crucial that the Sale of Business document covers all the essentials. If you’re selling your retail-based business, here are some of the more salient legal considerations, that should be noted in the sale of business agreement:

Transfer of lease

Usually, retail-based businesses operate from leased premises. When selling a retail-based business, this lease will need to be transferred concurrently with the sale or, alternatively, a new lease entered into by the landlord and new buyer. A business sale lawyer will be able to examine the documents to determine the mechanism for transfer.

Registrations and domains

Most companies these days have a website and social media accounts to help promote their brand. While the ‘main’ asset being sold is the bricks-and-mortar store, it is good practice, and will often be a requirement of the purchaser, to have a mechanism to transfer these items, too.

Employees

The transfer of workers often results in an adjustment at settlement (for outstanding entitlements). Before this, however, you need to think about how you will notify them, and the ability of the purchaser to continue or decline ongoing employment.

Stocktake

It is common for stocktake to occur just prior to a settlement, with an adjustment being made. The details of the stocktake should always be set out in the Sale of Business Agreement.

Ongoing contracts

Often, such businesses have current contracts, be they with suppliers or third parties. The mechanism for transfer or assignment of same should be clearly spelled out in the Sale of Business Agreement.

Conclusion

Before you agree to sale terms with a Purchaser, talk to a business lawyer about these and other important variables. Failure to do so may have serious ramifications or complications, even after the sale is completed. the moral of the story is to take all necessary precautions when selling a retail business. Get in touch with LegalVision on 1300 544 755.