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Legal Considerations for Starting Your Convenience Store

Forgotten to pick up that vital ingredient for dinner? Need a last-minute birthday card? Out of milk? Convenience stores often come to the rescue when we need it most. Over time, these stores become a central part of the community, with their easy accessibility and personalised customer service valued by customers. So, how do you set up your own store and become an integral part of your community? Starting a convenience store requires capital to rent or buy the store premises and to purchase the inventory you will sell. If you are confident about your finances and are wondering where to start, this article will run through key legal issues you should consider before opening your doors to the public.

Setting Up

There is a considerable level of competition in the convenience and general store market. As such, it is important you set up your business correctly to give yourself the best chance of success. Choosing the right business structure is one of the most important decisions you will make when setting up your business. There are four common business structures to choose from:

  1. company;
  2. trust;
  3. sole trader; or
  4. partnership.

A company structure is best if you are concerned about limiting liability and protecting your personal assets. A company is considered a separate legal entity from its individual shareholders. This means that your personal assets will not be affected by the actions of the company. In comparison, sole traders are personally liable for any issues the business may encounter.

A company structure is also ideal when you are looking to grow and scale your business. Companies are more attractive to prospective investors than other types of business structures. A company will be your best bet if you are looking for investment opportunities.

How you structure your business depends on tax and accounting factors, so it is best to seek legal and financial advice before deciding on which business structure is most suitable for your circumstances.

Location, Location, Location

Having the right location is vital to the success of your convenience store. As the name implies, your store should be situated in a convenient place. You might locate yourself in a residential area to attract customers who do not want to travel all the way to the nearest supermarket. Or perhaps you may choose to set up near a main road or highway to attract travellers passing through.

Think about whether there are convenient parking options available near your desired location or if it is an area with high foot traffic, like near a train station. The easier it is to access your convenience store, the more likely people will visit.

Once you find your ideal location, you will need to obtain various licences from your local council. These may include approvals to:

  • conduct commercial business on those premises;
  • carry out any development work to fit out your store space; or
  • confirm the development and use meets council requirements, once any work is completed.

Check the Australian Business Licence and Information Service website or contact your local council to identify what business licences you may need and how to apply. A lawyer can help with your licence applications to ensure the best chance of approval. The application process can be time-consuming and costly, so conduct careful research and allow plenty of time to acquire consent.

If you are renting the premises, you will need to discuss the terms of the lease with the landlord and enter into a lease agreement. Leases can be tricky to terminate if you are unhappy. Accordingly, it is essential to engage a qualified lawyer who can explain the key legal risks under the lease agreement before signing.

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Your Goods and Services Selection

Convenience stores compete with various businesses, including supermarkets, kiosks and news agencies. As a result, it is important to think about what products and services your store will offer to draw customers in and set you apart from your competition. 

Convenience stores generally attract four types of customers. They include those who:

  1. routinely use your store for everyday purposes;
  2. come to your store to buy and also enjoy the social aspect and are drawn in by the sense of community; 
  3. are last-minute shoppers and need to pick up an item here and there; and
  4. enjoy the novelty of products and brands offered by convenience stores.

To maximise your patronage, you should offer products and services that cater to all these customer types. For example, think about stocking not only essentials like bread and milk but also unusual products, limited edition flavours, international stock or gift items. Researching what products or brands your competitors do not sell and filling this gap in the market is another effective way of improving your profitability.

In addition to selling traditional items like snacks, toiletries, and stationery, you should also offer a range of products that are specifically tailored to your local market’s demographic. For example, if your store is located in an area whose residents enjoy eating vegan food, it is a good idea to stock your store accordingly. If you are located near a train station, provide travel card top-ups or phone sim cards. Remember that the better your products are presented, the more sales you will make.

Additional Licences

You will need to obtain additional licences from your local council if you want to offer certain products or services. Depending on your local state or territory, these may include:

  • a licence to sell tobacco or alcohol products;
  • a licence to sell meat products;
  • a food licence, if you intend to serve food to customers;
  • a licence to sell poisons, such as cough medicine or pain relief tablets; or
  • licences to sell fuel, such as the Flammable and Combustible Storage Licence in Queensland.

While obtaining licences does cost money, they can be a good long-term investment, attracting customers who need these goods or services.

Opening Hours

Part of the benefit of convenience stores is that they are usually open early in the morning or late at night when it is otherwise difficult for customers to buy the items they need. Stretching out your operating hours to accommodate late-night or early-morning customers can be profitable because you capture a market of consumers who cannot turn anywhere else to get what they need. 

As a business owner, you can decide what days your store will be open and your trading hours. You may also choose to operate on otherwise ‘restricted days,’ such as Easter Sunday or Christmas Day. This is possible if your store has no more than two owners and four regular employees.

Keep in mind if you are open outside ordinary hours, on weekends or public holidays, you may have to pay penalty rates to your employees. The rate of pay may also be linked to an industry award (Award). The Award will form the basis of your contract with your employee. A lawyer can help explain the Award to you so you always remain on the right side of the law. 

It is important that a lawyer also drafts or reviews your employment contracts to ensure they are fair and compliant with employment legislation while helping you get the most from your employees as possible.

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Key Takeaways

Starting your convenience store takes a lot of planning and work. Finding the right location and mix of goods and services to offer will go a long way in attracting customers. Finally, make sure you get the licences you need to offer the goods and services you want. 

If you want help starting your convenience store, or need a lawyer to review your contracts or licence applications, our experienced business lawyers can assist as part of our LegalVision membership. For a low monthly fee, you will have unlimited access to lawyers who can answer your questions and draft and review your documents. Call us today on 1300 544 755 or visit our membership page.

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Julia White

Julia White

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