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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.

Mendis & Gibson Lawyers

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.

Mendis & Gibson Lawyers

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.

Mendis & Gibson Lawyers

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.
  • YouTube channels
  • YouTube channels
  • YouTube channels are linked to Google accounts.
  • A Google account can be owned by an individual or a business. A Google account owned by a business is called a ‘Brand Account’.
  • A YouTube channel linked to an individual Google account cannot be transferred even if the business it showcases has been sold. A channel that is linked to a Brand Account can be transferred.
  • Most small businesses establish their YouTube channel in the proprietor’s personal Google Account and do not take the trouble to set up a Brand Account.
  • To achieve a transfer of a YouTube channel with a business sale, the channel must first be linked to a Brand Account and the purchaser must establish a Brand Account for the channel to be transferred to.
  • The procedure to transfer a channel from one brand account to another is described here.
  • to bring proceedings against the infringement of the copyright work.
  • Facebook
  • Facebook accounts have different types of ‘roles’ for managing accounts. There is no limit to the number of people who can have a particular role, including the administrator role. Only an administrator can add and remove people from these roles. An administrator can remove or demote another administrator.
  • There is no mechanism to ‘transfer’ a Facebook account. Transfer is affected by changing the administrators of the account.
  • The procedure for an administrator to manage roles in a Facebook account is here.

Mendis & Gibson Lawyers

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. 

Mendis & Gibson Lawyers

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.

Mendis & Gibson Lawyers

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.

Mendis & Gibson Lawyers

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.
  • Sole proprietors
  • Easy to establish and start up cost is very low.
  • The sole proprietor has unlimited liability for debts as there is no legal distinction between individual and business assets.
  • Low rules and regulations compared to a company.
  • Taxed as an individual person.
  • Partnerships
  • Easy to establish.
  • A partnership is established simply by the partners commencing a business in common with a view to profit. Although the Partnerships Act establishes significant rights and obligations of partners, it is prudent they make a partnership agreement that deals with issues not covered by the Act.
  • Partners are jointly and severally liable for the debts of the partnership and bound by the conduct of other partners.
  • Companies
  • A corporation is established by registration with ASIC. There are registration fees which are relatively modest. Rights and obligations of shareholders and directors are prescribed by in the Corporations Act and the replaceable rules under the Act, which may be adopted. Alternatively, a constitution can be adopted on or after registration, which operates as an agreement between shareholders and the company.
  • Shareholders in companies have their liability confined to the amount unpaid on their shares.
  • Directors of companies are protected if they act appropriately. They are not protected for example if the company trades whilst insolvent or in relation to unpaid group tax. Lenders and those providing large trading accounts will normally require their individual guarantees.
  • Annual renewal fees and reporting requirement.
  • Trusts
  • Unit trusts are in many ways similar to companies with no liability of the unit holders beyond what is not paid up on their units. The trustee will be indemnified in the trust deed thereby making trust assets available to creditors.
  • Discretionary trusts with a corporate trustee provide the same level of protection as a company but with greater flexibility.

Mendis & Gibson Lawyers

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.

Mendis & Gibson Lawyers

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.

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Our Founders Sidney Mendis and Anna Gibson established Mendis & Gibson Lawyers nearly 20 years ago. Over the decades, we have grown to become one of the leading Law firms in Melbourne with offices in North West, Melbourne CBD and South East.

Main Office (Niddrie/Essendon)

Melbourne CBD

Dandenong Office

IMPORTANT LINKS

Our Founders Sidney Mendis and Anna Gibson established Mendis & Gibson Lawyers nearly 20 years ago. Over the decades, we have grown to become one of the leading Law firms in Melbourne with offices in North West, Melbourne CBD and South East.

Main Office (Niddrie/Essendon)

Melbourne CBD

Dandenong Office

IMPORTANT LINKS

IMPORTANT LINKS

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