Hi I've been offered to buy a hairdressing business. Dealing with the lady who owns the business is fine and all payment is clear. The actual landlord has said to me that I have to pay a substantial amount for the lease plus the rent per month on top. What do I get out of the lease? It seems that I am paying a lot for nothing??? X
Leasing
- Thread starter Brownie
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ClaireL
Well-Known Member
Im not sure but if your buying a business from her would you not take over her remaining lease with the business then re-negotiate once that has run out?
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ClaireL
Well-Known Member
oh 
not good maybe take the new lease into consideration price wise when offering a price to the business on the basis of the new lease??
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not good maybe take the new lease into consideration price wise when offering a price to the business on the basis of the new lease??
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Hiltonbeauty
Well-Known Member
But if the lady owns the business then how can the landlord sell you the business? OK there is no lease as the landlord says but there are tenants rights out there he can't just throw her out. Also what if it's a limited company, if she owns the name, phone numbers, website etc then she can open up next door and retains all clients then you've paid some money for nothing!
That's just me being cautious But if she's happily leaving a business with no fight then fair enough. But why would someone do that!!
That's just me being cautious But if she's happily leaving a business with no fight then fair enough. But why would someone do that!!
persianista
Well-Known Member
Because she has no lease. She actually has no right to be there.
Male Storme
Well-Known Member
With no lease, she has no tenancy to sell on. Basically the only thing she has to sell, are any fixtures and fittings that belong to her. She has no business to sell, because she has no tenacy to sell on to operate the business.
If she had a lease, she would sell the business, plus lease, subject to the landlords consent of new tenant, not to be unreasonably withheld.
However if the landlord now decides he wants any new tenant to take a lease, he is within his rights. And if he wants a premium for the granting of that lease, again his rights.
She also has goodwill to sell, which is her client base however you would want to protect this in your transfer agreement by having protection clauses e.g. Not approaching /taking clients within xx amount of time and/or within a certain radius of the salon
Male Storme
Well-Known Member
There is no goodwill if the business has to move premises. If clients have to go somewhere else, they can go anywhere. They may move to new premises with the existing operator, but I would guess the majority would not for a new operator.
She has no business to sell on in these premises, as she cannot transfer a tenancy.
If she can find a way that the landlord is happy with to transfer the premises to a new operator, then she would have goodwill to sell.
Im sorry but this isn't right. This did used to be the case but HMRC have now changed their guidance on it. Goodwill can be sold without premises however it is acknowledged that the value will be substantially lower.
If a business is sold as a going concern the sale price can include the sum of the tangible assets plus any other business related assets such as the records of previous/current clients, contracts with customers and contracts with suppliers, staff etc
Brownie- Perhaps you could ask the seller to explain how she has valued the business? If you were to go ahead you would need to agree these figures for apportionment anyway and so it will get you both thinking!
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Male Storme
Well-Known Member
It is regardless of what HMRC say. It is what someone is willing to pay for goodwill. And a business with visiting customers, needs to stay in the current premises to have goodwill.
If it was an online business, that could be operated from anywhere, or a mobile hair or beauty business, then yes it has a goodwill value. But anyone paying for goodwill under these circumstances, needs psychiatric treatment in my opinion.
Would you seriously pay for goodwill to a business with visiting clients, that you know you are going to have to move because the landlord will not let you occupy the existing premises? I know I would not.
Even if the seller has all the client details for you to contact them, how many will come to you, a total stranger to them, operated from a different address?
I would just find another hair dresser that I know, or have had recommended.
Victoria1984
Well-Known Member
To be honest this potential purchase sounds like it is going to be fraught with difficulty.
Do you know why there was previously/currently no lease in place? Or why the current owner wants out of the business? I think if it were me I would steer clear and look for other potential salons.
Do you know why there was previously/currently no lease in place? Or why the current owner wants out of the business? I think if it were me I would steer clear and look for other potential salons.
