If you are considering purchasing a business or franchise, Hutchinson Legal can provide practical legal advice and assist you with the process.
We can review and advise on the Contract of Sale of Business, negotiate any changes to the Contract that you may require, facilitate the transfer of the lease and any licences or permits, ensure that you receive all assets free of all encumbrances, prepare the adjustments and arrange for settlement.
Our experience in commercial law matters means we can also help you avoid the many pitfalls associated with purchasing a business or franchise. We can assist you to identify hidden liabilities of the purchase and can advise regarding your business structure options. We are available to help protect your trade interests following the purchase by reviewing the documents used by the business. Due diligence is a critical factor in purchasing a business.
We have extensive expertise to ensure that settlements are not delayed due to lack of familiarity with procedures and documents. We can prepare contracts or carefully screen agreements to ensure that your interest is protected. There are many pitfalls in dealing with business brokers and vendors and we suggest you approach us well before getting to a decision point.
A prudent lawyer should conduct the following due diligence before you sign the Contract:
• Reviewing the Contract of Sale of Business
• Reviewing the Transfer of Lease, Lease and Disclosure Statements
• Conducting searches of the vendor on the Personal Property Securities Register to determine if any charges are registered against any of the assets included in the sale
• Conducting searches of the vendor and purchaser on ABN Lookup to check if the parties are registered for GST, which is a requirement for the sale to be a GST-free supply of a going concern
• Conducting searches of the business name on ASIC’s register to ensure the business name is registered to the vendor and the registration fees are paid up to date
• Conducting a search of the title and plan to check the landlord’s details and if there is a mortgage registered on title (as the mortgagee’s consent will be required to the transfer of lease)
• Checking the zoning and overlays for the property to determine if your intended use requires a planning permit or is prohibited, and if works to the property may require a planning permit.
Some Contracts of Sale of Business provide for an assistance period before or after the settlement date. During this period, the vendor must do whatever is reasonably necessary to introduce you to customers and suppliers of the Business and give the purchaser reasonable assistance and advice about running the Business.
Usually this assistance period is unpaid. If you require the vendor to assist you for a long period post-settlement, the vendor may require payment. This arrangement will require additional special conditions in the Contract. It will also require careful consideration of whether the vendor will be a contractor or employee so that you do not breach employment laws.