Posted by Elizabeth Gore-Jones
on 9 June 2015
OK, so I get that the use of song titles and somehow tying them into franchising or business law may be becoming a little tenuous.
However, you would be surprised the number of people who jump into legally or contractually binding relationships or agreements without fully appreciating their obligations or risks, and thus, like a prayer just hoping things will work out.
Here is a checklist of some of the due diligence enquiries you should undertake when enter into a new legal relationship:
1. Business Purchase
1.1 company search - if the seller is a company;
1.2 bankruptcy search - if the seller is an individual;
1.3 PPSR search - check if the assets are encumbered;
1.4 Accountant's review - have your accountant look at the financials to help ensure the check out; and
1.5 solicitor's review - have your solicitor review your contract so you know what you are getting into and to help to ensure you are getting everything you bargained for.
2. Lease
2.1 property search - does the landlord actually own the property? Is there anything to prevent registration of your lease?
2.2 Accountant's review - will give you advice about your financial obligations - in most cases this is required under the Retail Shop Leases Act; and
2.3 Solicitor's review - understand your obligations - again in most cases this is required under the Retail Shop Leases Act.
3. Franchise Agreement
3.1 company search - if the franchisor is a company;
3.2 bankruptcy search - if the franchisor is an individual;
3.3 Accountant's review - will give you advice about your financial obligations - some franchisor's require you to obtain this advice;
3.4 solicitor's review - understand your obligatoins - again some franchisor's require this.
Make sure you do your due diligence. it is a small expense and effort compared to what could happen if you just take the risk.
Disclaimer - This article is not to be relied upon as legal advice. You should seek specific legal advice for your circumstances. You can contact The Franchise & Business Lawyers to receive legal advice specific for your needs.
