When it comes to selling a business in Queensland, most lawyers will use the standard REIQ Business Contract. The standard terms are certainly acceptable; however it is important to ensure you have a solicitor prepare or review Special Conditions to ensure your interests are protected.
The Special Conditions allow you to pick and choose which standard conditions you wish to apply for your business purchase or sale in addition to allowing you to include additional obligations on either the buyer or the seller to meet the unique circumstances of your business purchase or sale.
Franchise Business Sales
Special Conditions are particularly important when you are selling or purchasing a franchised business. A franchise business sale will always be conditional upon a number of things, including for example payment of a transfer fee by the outgoing seller, approval by the franchisor of the buyer as a franchisee, receipt of a disclosure document and franchise agreement by the buyer within the time stipulated in the Franchising Code of Conduct, and execution of a deed of surrender and release by the seller (or outgoing franchisee). These conditions are not contemplated by the standard terms of the REIQ business contract and accordingly they need to be included as special conditions annexed to the business contract. If these conditions are not correctly drafted, there is a risk to the buyer (for example) of being bound to an unconditional business sale agreement without having the opportunity to be satisfied with the terms of the franchise agreement. There is also a risk to a Seller of being contractually bound to an unconditional business contract, when the buyer is not approved by the Franchisor.
Sale or Purchase of a Business that is not a Franchise
Special Conditions are not simply for the sale of franchised businesses, they can also be used to document whatever has been commercially negotiated between the parties. For example, a buyer require the seller to terminate the employees and pay out all entitlements, or a seller may require, on the basis that the bulk of the due diligence enquiries were carried out prior to entering into the business sale agreement, that the contract becomes unconditional as soon as possible.
In short, the REIQ Business Sale Agreement is an acceptable form of contract for the sale of a business or purchase of a business however it is important to obtain legal guidance to prepare special conditions, a deed of restraint of trade for the seller, and ensuring your obligations pursuant to the contract are met – such as releasing security interests from the PPSR or transferring Trade Marks to the Buyer at Date of Completion.
As part of a business purchase or business sale our commercial lawyers can provide the following assistance:
- Structuring Advice
- Establishing a proprietary limited company
- Setting up a discretionary trust (family trust) or unit trust
- Assigning leases and negotiating with the lessor’s solicitors the terms of a lease
- Preparing vendor finance agreements (loan agreements)
- Lodging or releasing security interests on the PPSR
At IP Partnership Lawyers we offer a fixed fee quote for the sale or purchase of a business. The quote will vary depending on whether the business is a franchised business or if there is a lease for a premises that needs to be assigned. Our commercial lawyers are also able to assist on the front end of the transaction, prior to a contract being entered into, with pre-contractual negotiations.
Buying a business or selling a business can be stressful. Our team are focused commercial lawyers, meaning we are not a general practice law firm that does residential conveyancing, family law, litigation, personal injury or criminal law – IP Partnership Lawyers is a modern commercial law firm acting for clients located all over Australia, with a no-nonsense approach to legal services. In short, it’s our business to take care of your business.
