There are hundreds of retail businesses out there that are ready to be purchased. But how do you know if this is the right business for you? Retail business can range from food outlets to convenience and electronics stores. They can be located on the street or in shopping centres. This article will outline various legal considerations you need to make before jumping into the purchase!
Where is the business located?
The premises of the retail business are one of the crucial factors to its success. You would need to consider if the location would assist in maintaining ongoing running costs of the business. Make sure you speak to the vendor about this and ensure you get a copy of the lease early on so you are aware of your obligations.
What is included in the sale?
If you want to continue operating the retail business and maintain its current structure, ensure you know what assets will be included, as well as the current stock. For example, if you are purchasing a clothing store, will all existing stock be provided to you as part of the purchase price? Will the fit-out of the store also be included, such as furniture, fixtures or design items that give the store its character? What about computers and Eftpos capabilities? Although this may sound like common sense, you will be better protected if you have itemised lists and an outline of costs so you can breakdown the details of the purchase. This can all be included in the Sale of Business Agreement.
What about suppliers?
If you are planning to buy a retail business that relies on the supply of unique or specific products, than maintaining an ongoing relationship with the vendor’s suppliers is crucial. The Sale of Business Agreement can require the vendor to transfer existing Supplier Agreements to you as the new purchaser. You can also see if you can negotiate a training period with the vendor, which can include the opportunity to meet suppliers personally in order to understand how they will work with you in the future.
Can you limit your liability?
The Sale of Business Agreement is an important document as it specifies the moment where you will take on responsibility as the new owner of the business. This will help to prevent you from being liable for any past debts or liabilities the vendor has incurred as a result of their operation.
Understand Australian Consumer Laws.
As a retailer, you have continuous contact with customers. Although this may not be included in the initial sale of business, be sure you are aware of your obligations to customers. This can include things like warranties, refunds as well as sale and discount displays. The vendor may be able to assist in running through the ins and outs of their retail approach with customers through a training period.
If you have made the step to purchase a retail business and are at the legal due diligence stage, contact the LegalVision team on 1300 544 755. Our Client Care Team can explain the legal considerations of the purchase and one of our business lawyers will be able to assist with drafting the agreement and making the sale or purchase!