Totally agree with the post above!!

there is a salon near me, she wanted to sell up and was selling her biz at a reasonable rate but on top of that she wanted £10k for her "goodwill package".
She had a lot of people interested in purchasing but baulked at the cost of the goodwill package.
Oh and I was asked if I wanted to buy it by the way.

Turns out she was going to turn her garage into a salon and work from it on a part time basis.

Now, she lives 2 minute drive from the salon, and clients love continuity, so are they going to:

a) want the continuity of the salon
b) want the continuity of the therapist

she is still running the salon as no-one wanted to buy the biz.

whenever I have bought a salon, I have put a radius clause in the sale contract. Totally enforceable unlike in an employment contract.
Goodwill sale is a normal part of business sales, in this case, I fail to see how it's justified.

I would never buy a client database from a therapist leaving a treatment room as you just don't know if they are going to be working from home, mobile, whatever. Loyal clients will follow a therapist they love.

My view is that she has to tell the clients she is leaving and they will obviously want to know if the room is being taken over. If she tells the truth and lets them know another therapist is taking over well of course they are more than likely to try you, why wouldn't they ? If she was planning to lie and pretend that the room is empty well the easiest way around that is to agree with the salon owner that you can advertise before you start (which i would do with or without an existing therapist)

I think with an actual salon you kind of expect a client database to be part of the deal but a one man band is a bit different imo. I think if my hairdresser suddenly stopped trading and then some random contacted me out of the blue I would be very annoyed that my details had been 'sold' without my permission.

Just done the maths for you, to justify a goodwill value of £4000, she would have had to have declared profits of 16000 last year. If she could prove she paid tax on this amount of PROFIT, not TURNOVER, then the payment would be justified, subject to a proper contract which would include a radius clause.
Hope this helps x

Thank you all for your replies, it have given me alot to think about. I have to add that I think she is entitled some money for good will, it's just really knowing how much to pay for it. I will keep you updated

Hi Yvonne,

I really can't see what you think is worth buying from this lady? She could sell you her client list, but how many are active? How do you know she's not already contacted them all and is going to be working mobile or from home?

Are you taking over her trading name, website, advertising etc?

jes

Hi Jess,

you raise another few points there that again I have not even considered. I have found out that she is leaving in December I think I may just wait until then.

I was in a similar situtaion to this when i started my business in a hotel. The lady who was there before me wanted to sell me her "business" for far more than the value of her equipment/stock... i knew she was quitting because business had been quiet so there was no way i was gunna pay her for imaginary client base.

in the end i didnt take her up on it... i just waited for her to move out and then the hotel asked me to move in and i started afresh buying everything from new... which actually cost me less than she wanted for the 2nd hand stuff even after redecorating etc!

once i was up and going all her old clients came back to me anyway because they heard the salon was open again and they were happy to return for conviences sake if nothing else.

i wouldnt change a thing. i would be careful about buying "goodwill", likie someonelse said the clients will go wherever the please in the end

i hope this helps.

... oh also one other thing.... find out how many gift vouchers she has in circulation.... coz if u take over her "business" u will prob be expected to honour these...

the lady i moved in after never mentioned this at the time she was tryin to sell it to me and it turns out a few ppl rolled in with various vouchers after she'd packed up and gone...

True about the gift vouchers.

I once belonged to a tanning salon that had a great reputation. I had purchased a package, and returned to use it one day. I arrived and was politely told the salon had been sold, and the new owner was not honoring previous packages that had been purchased. The salon name hadn't changed, and there was no new equipment.

Needless to say, I didn't return. And I told all my friends.