Current Area: Legal Services -> Business

Purchase or Sale of a Business

It is important that a purchaser or seller consult with their lawyer before the contract is signed to ensure that it is understood, that any necessary conditions are included, and that his interests are otherwise properly protected. There are a number of conditions that a purchaser should consider including in an Agreement, which if not satisfied, would allow the purchaser to terminate the contract and to receive a refund of his deposit.  Such conditions may include: a time period within which to allow the purchaser to obtain any necessary financing; an opportunity for the purchaser  to inspect the financial and/or other records of the business, and  an  opportunity for the purchaser to observe the operation of the business.

If you are considering buying or selling a business, please contact us early in the process to review the proposed transaction with you and to ensure that your interests are properly protected.

Franchises

The purchase of a franchise usually involves the acquisition, for a defined period of time, of the rights to operate a particular business by a particular system, to sell particular products, and to use a particular business name.  Along with the very specific rights provided to a franchisee by a franchise agreement, there are ongoing obligations of the franchisee to the franchisor, which may include:  payment of a periodic share of its revenues in the form a royalty fee;  sharing in the cost of the franchisor’s local and/or national advertising; and periodic reporting requirements to the franchisor.

Before purchasing a franchise, it is important to understand the complex nature of the legal relationship create by the franchise agreement, which should involve the thorough review of the proposed franchise agreement by a lawyer.

If you are considering purchasing a franchise, please contact us early in the process to review the proposed transaction with you.

Incorporation

Partnership     

Sole Propriertorship

A corporation involves at least one person (and may involve many more), a partnership requires at least two people, and a  sole proprietorship is a one-person business.  The legal implication for each of these business structures are very different. 

A particularly attractive feature of a corporation is its “limited liability” nature.  In general, the shareholders, directors, and officers of a corporation are not liable for the debts of the corporation.  Many businesses are set up as corporations in order to protect the personal assets of the operators from creditors of the business.

If you have a business, or will be buying or starting one, please contact us to review with you the pros and cons of incorporation, partnership, and sole proprietorship, and to advise you on what may be the most appropriate structure for your business.

Shareholders Agreements

Partnership Agreements

In most cases, it is appropriate for shareholders of a corporation to enter into a shareholders agreement in order to set out the respective rights and obligations of each.  A shareholders agreement will often include provisions concerning:  how the profits are to be distributed; a mechanism for the purchase/sale of shares between shareholders; a restriction on the transfer of shares to non-shareholders; a definition of the roles and responsibilities of each shareholder; and what happens on the death or disability of a shareholder.

A partnership agreement sets out the rights and obligations between the members of a partnership.  The provisions of a partnership agreement will often include:  how profits are to be split, a mechanism for buying or selling an interest in the partnership between other partners; a restriction on transferring an interest in the partnership to a non-partner; and what happens on the death or disability of a partner.

If you are or will be a shareholder or a partner, please contact us to discuss whether the protection of your interests requires a shareholders agreement or a partnership agreement.

Commercial Leases

A commercial lease is usually a lengthy, complicated and tedious document.  Its terms will usually affect a business for many years and may have a profound impact on the success or failure of the business.  It is important to get proper legal advice before the lease is signed so that desired revisions can be identified while the terms of the lease are still open to negotiation.

Please contact McPhadden, Samac, Merner, Barry for advice on your leasing issues

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