business sale Tag

A new national business names registration system commences on 28 May 2012. The national register of business names will replace the existing state and territory registers. The new system will be administered by Australian Securities and Investments Commission (ASIC) Benefits of the new national register The national register will offer some advantages to Queensland business owners:
  • The national system eliminates the need for registration in more than one state.
  • The new system will allow for online registration and renewal. Online payment options will also be available.
  • Business name registration will happen simultaneously with the registration of an Australian Business Number.
  • There may be a reduction in fees in Queensland

Almost every commercial lease will provide that before a lease can be assigned, the consent of the landlord must be obtained.   If  you have commercial premises associated with your business there are some very good reasons to make sure that the assignment of the lease is properly handled. We recently acted for a commercial tenant.  This client came to us with a big problem, which had only become obvious to them a year after the date of the sale of their business. The commercial tenant had sold their business a year earlier and had assigned the lease of the business premises to the buyer.  Things did not go smoothly. The landlord set out the conditions upon which consent would be given.

It is quite common for Franchise Agreements to contain clauses which have a significant effect on the way in which the sale contract should be drafted.  If  a contract for the sale of a Franchised business is signed without first reading the Franchise Agreement and checking any requirements, then it may be difficult to unravel the resulting mess. There is a lengthy list of things that need to be checked.  If  steps are not taken to ensure compliance, then it is likely that any sale contract will be in conflict with the Franchise Agreement.  This problem can be difficult to resolve because the sale contract may oblige the seller to do one thing and the Franchise Agreement may prohibit the doing of that same thing.

There is no such thing as a standard Franchise Agreement.  However there are certain things that all Franchisors will try to control using their agreement.  This need for the Franchisor to maintain control gives all Franchise Agreements a common flavour. There is sometimes a misconception that the Franchise Agreement is designed to protect both Franchisor and Franchisee.   There is however little contained in a Franchise Agreement which is designed to protect a Franchisee and this is often a source of disappointment to the Franchisee once the documents are reviewed.  Franchisees do however enjoy significant protection given at common law, from legislation such as the Franchising Code.

You cannot own a business name!

Before you even commence business you must understand the difference between each of these very different business tools  - Business Names, Trade Marks and Company Names. Anyone considering the sale of their business  should also consider these things carefully. If trade marks, domain names, business names and business structures are not all in order, then seek legal advice as early as possible.  We have seen business sales fall over because intellectual property including the business name is not registered. The registration of the name is a process, nothing more, and that process does not guarantee exclusivity. The business owner having registered the business name has no legal right to prevent others from using that name, nor does completing the registration process provide any entitlement to compensation if the name is used by someone else without authority.

So what do you own after registration of your business name?  It may surprise you that, you own nothing.

"That contract's not worth the paper its written on".  I understand that this is how people may feel, when they have  taken the time to make a contract, yet a dispute arises anyway.  Nevertheless this statement is rarely true, where a contract is properly drafted.

The point of a contract is to provide the parties to the contract, with a starting point, in case there is a  disagreement.  It is not the case that a White Knight will ride in, to put things right, when the terms of the contract are broken.  If the agreement is properly drafted there will be a good number of matters on which it is more difficult to have an argument.  Yet there will remain scope for an argument and it is up to you to enforce your rights.  You will see below there are things that you can do to make a dispute less likely.

Most transactions whether for the sale of property or a business include at least two or three important dates. These dates are:

1. The date that the contract is signed by the parties to that contract

2. The date that special conditions are satisfied

3. The date that the contract reaches settlement or completion. The completion date and the settlement date are different words, used to describe the same thing.

Which of these dates do authorities rely upon when determining the date of the sale?

The cost of preparing legal documentation to turn a business into a franchised system is between $8000 and $20,000 plus GST .  This cost may be recovered by the sale of  franchises. Once the template documents are prepared the franchisee should pay the franchisor's costs to prepare and issue the documents, as well as the cost of negotiations. We set up franchise systems for clients throughout Australia. Please contact us for an instant quote.  The task of preparing this documentation is a routine legal engagement for us however it is a lengthy process where each step in the process must be respected. We can usually provide draft franchise documentation within 2 weeks of receiving instructions.

The cost and time involved is determined by the complexity of  the system, and the extent to which the client has resolved issues relating to the workings of the system.  For example if the franchise system relates to a home or vehicle based system, then the cost is generally not much more than $8000 plus GST. When it is necessary to incorporate procedures relating to retail shop leasing then this would normally add another level of  processes and cause cost increases.