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What do I need to do if I am buying an existing business or taking on a franchise?

Before buying a business or taking on a franchise, you need to be absolutely clear about what you are getting. For example, you need to know:

  • What equipment, premises or other assets you are buying.
  • What business debts and other liabilities you are taking on — for example, if any equipment is leased — and what you will need to do about transferring these.
  • Whether you will be taking on any employees as part of the business, and what their contracts and rights are.
  • What other contracts the business has — for example, with suppliers — and how these might be affected by the change of ownership.
  • Any restrictions or responsibilities you are agreeing to as part of a franchise agreement.

It is essential to have a properly drafted contract setting out exactly what you are buying, for how much, and what responsibilities you are taking on. You may well also want an accountant’s report to ensure that the business assets and liabilities are clearly detailed.

In terms of choosing whether to trade as a private limited company or another business structure, this will depend on the circumstances. For example, you might be buying the shares of a private limited company, buying particular assets from a business, or starting a new business to take on a franchise. You should take advice as there can be important tax and legal implications.

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