Business & Franchise (Sale and Purchase)

Purchase of business

If you are planning to buy an existing business or Franchise or to start a new business, we can help you with process.

If you are planning to buy an existing business or Franchise or to start a new business, we can help you with process. Purchasing a business is an important step that you are taking. You may have business experience, expertise and skill or you may be a beginner to the business world with less experience and skills. As per the Australian Bureau of Statistics more than 60% percent of small business stop their operation within the first 3 years of their start-up journey.

That is why it is crucial to obtain proper advice prior to purchase of business. At Mendis & Gibson Lawyers we guide you to bring you desired outcome with our expertise in this area.
To gain a better understanding, we kindly ask you to check our Sale of Business FAQS in addition to the Purchase of Business FAQs below, to provide you with a more holistic understanding of each of the areas.

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Why would I need a lawyer when I purchase a business?

From our experience we understand at times, purchasers get excited about a business proposition that they may have seen on the internet or presented by business brokers and without doing proper due diligence they may feel included to make an impulsive decision to commit. These decisions carry legal implications, as much as we understand that good opportunities get seized quickly, we highly advise that you seek proper legal advice from a solicitor who has experience in this area prior to entering into any agreement. We want our client to succeed in their journey but at the same time we want to make sure that we verify the type of contract they are entering into, the legal commitment arising from this and the liability should something happen.

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Do I need to get each asset and equipment valued separately in the contract?

Purchasers acquiring depreciable assets must establish a cost base. If the asset is purchased at arm’s length for a separately identified price, including by apportionment in a contract for sale of business, the costs base is the separately identified price. But if the price of the asset cannot be determined in this way, the purchaser must determine the amount reasonably attributable to the depreciating asset so it would be beneficial for purchaser to get a detailed value list from the vendor.

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Can I ask Seller to transfer their Website, Email accounts and Social media such as Facebook, Instagram and YouTube?

Of course, a purchaser can ask this especially at the negotiation stage. It is crucial to add it in the Sale of Business Contract if this agreeable by the vendor. Online presence is an important part of modern businesses. Websites and Social Media accounts are one of the bigger asset pools for modern day businesses. Having great web traffic, number of followers on Social Media and Youtube make busines sales and online presence have shown to impact business income and reputation directly.
When purchasing or selling a business which has a website, domain name or email, it is important to contact the internet service provider to advise them of the sale and the new owner’s details. They will assist in arranging for the transfer of the domain name registration. Likewise, in practice, vendors normally either provide administrator rights or usernames and passwords to purchasers. In would be recommended to provide in formal writing to providers to inform them of the transfer.

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Can I get a business name transferred as part of the sale of business ?

Business names are not strictly ‘intellectual property’ in the sense that trademarks are, it is
clear that they can have substantial value. Every business name must be registered with ASIC
unless the proprietor is trading under their own name. For example, a proprietor named
Ricky Martin trading under the name of ‘Ricky Martin’ does not need to register his business
name. However, if he were to be trading under the name Pop Music School, he would be required to register the name with ASIC. 

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Do I get exclusive right to use the name once business is transferred or registered?

Many clients make the mistake of thinking registration creates a company or gives them some exclusive right to use the name, however registration simply registers the business name. To register a business name, an applicant must have an ABN or be in the process of applying for one. Applications may be made online with successful registrations confirmed immediately. Registration is available for one or three years; a schedule of the applicable fees can be found on the Australian Securities and Investments Commission website.

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What is the procedure for transfer of business name?

The procedure is that the owner of the business name, usually the vendor, applies to ASIC electronically for a ‘consent to transfer number’. Armed with this number the new owner, usually the purchaser, is able to effect a cancellation of the existing registration and issue of a new registration in their name.

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When purchasing a new business which business structure is best?

It all depends on each individual’s circumstances and it would be difficult to tell one is better than the other, each business structure has advantages and disadvantages. To make your business a success and gain maximum income, expense and tax reduction you definitely need a good plan and advice. If you need more information about business structures, see FAQs. Please also refer to our ‘’Company, Trusts, Partnership & Super Service line’’. Here is a brief synopsis of the various structures.

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Can I register a holding Company & Trading company for asset protection purpose?

Yes, you can but it would be highly advisable to get advice from an experienced practitioner or an Accountant prior to deciding. Usually for asset protection purposes, a holding company or trust that owns plant and equipment may license it to a related trading company or trust that conducts a business using such plant and equipment. In the event of the insolvency of the trading company, the plant and equipment will therefore not be available to the liquidator of the trading company as it is owned by the holding company.

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Can I get Intellectual property transferred, such as trademark transfer with sale of business?

Yes, you can during the negotiation stage, if the vendor has agreed it is better to get in writing in the sale of business contract and make sure you get trademark transferred to your business. If your business does not have a trademark registration, we can help you get your logo and wording registered as a trademark and registered under specific service class. Trademark is an intellectual property which you get exclusive right to. Please check our IP Law Service area where you can find detailed information regarding business branding and intellectual property.