Buying a restaurant business is a bummer's block! To protect against it, it is necessary to carry out an audit of the goodwill before the acquisition. An expert lawyer will be able to assist you with his experience to quickly identify potential pitfalls.
In addition, to guide you, My Food Business offers you a Check-List!
The existence of the fund & the seller's capacity
It should be checked that the seller Is he the owner of the fund and has the capacity to sell it (especially in the case of the existence of minority shareholders, joint owners, or sellers married under the universal community regime).
It is necessary to verify the existence and registration of the intellectual property of the fund (brand, domain name, registration on directories).
The numbers and the privileges and pledges
In addition, from the company's accounts, it will be necessary to check whether the fund is burdened with privileges or pledges. For this you have to do A request for a statement of privileges and pledges at the registry of the competent commercial court.
It is common for a bank lien to affect a fund, if the fund was acquired through a loan. In addition, kitchen equipment purchased under lease is usually subject to a pledge.
The restaurant lease
It should be checked that:
- the designation of the premises is in line with the activity of the goodwill;
- the lease has not expired and can be renewed at the end of the term;
- the seller has respected all the conditions of the lease (for example that all the work has been authorized by the lessor) and in particular that the rents and the security deposit have been paid by the seller;
- that the land has been used successfully for more than three years (condition for renewal of the lease);
During the transfer, it will be necessary to inform the lessor of the transfer in accordance with the terms of the lease and/or the law.
Taxes and fiscal solidarity
The General Tax Code states: a principle of fiscal solidarity for a period of 90 days between the seller and the purchaser as of the completion of certain declarations.
Therefore, it is important to check that the seller has paid his taxes. The public treasury and the URSSAF provide certificates that you will need to ask the seller.
However, with regard to the taxation of the seller's profits during the current year, there cannot be a sufficient statement from the tax authority. Article 201 of the General Tax Code establishes a specific declaration regime.
It is also possible to request a certificate from the company's chartered accountant, showing that the company's accounts are honest and reflect the economic reality of the business.
Neighborhood reputation & unrest
A check of the reputation of the business on the Internet is essential to ensure that it is the subject of good press.
It is also important to find out about relationships with the neighborhood to avoid finding yourself in the presence of a deteriorated situation and a possible dispute over neighborhood disturbances.
Social relationships
Employees of a business are transferred by operation of law in the event of transfer. Therefore, it is necessary to verify that there is no risk of social litigation after the acquisition.
The main contracts
It is appropriate to list the contracts to be taken over and check that these contracts do not contain a change of control or transfer clause.
Attention should be paid to the transfer of contracts:
- kitchen maintenance;
- of distributions;
- the telephone number of the restaurant;
- of the website.
If the business is a franchise, special attention should be paid to relationships with the franchisor.
Attention, the insurance contract is generally automatically cancelled at the time of transfer and it is necessary to take out a new insurance policy.
The restaurant premises
Accessibility
Restaurants are subject to accessibility regulations. It is therefore necessary to verify that the fund complies with the requirements in force.
It is no longer possible to obtain an exemption. While the administration has shown some tolerance for the compliance of funds, this is only tolerance, and the current trend is more severe.
Fire standards
Fire regulations must be respected and their non-compliance can lead to the administrative closure of a restaurant. The number of seats per floor and the presence of emergency exits should be checked.
Kitchen equipment
It will be necessary to check that the kitchen equipment complies with regulatory provisions (fat recovery, ventilation).
What about the restaurant terrace?
It should be checked that the restaurant has a license to occupy the public domain and that it has paid its royalties.
The right to terrace is a personal right and it is not linked to the goodwill in case of sale. It is therefore necessary to make a prior request to the administration in order to ensure that the transfer of the terrace right will be carried out.
Preemption, the urban plan in thermites and asbestos
Departments can set up a perimeter to protect trade and crafts (L 214-1 items and following of the Urban Planning Code), in the presence of such a plan, it is appropriate to notify the town hall of the transfer and it may pre-empt the property.
The urban plan is also an important source of information, especially in the case of alignment easements.
In the context of the transfer of a lease for commercial rental, the seller is obliged to transmit three diagnoses: asbestos, energy performance and a statement of natural and technological risks.
Works and facade
If you are planning to do some work, you should check that the latter are legally feasible.
It will first be necessary to check, if it is a condominium, whether the co-owners agree to the work, and if necessary obtain their approval in advance by a general meeting.
In addition, any modification to the facade of a building must be subject to a prior declaration procedure and may require authorization (it can be difficult to obtain in areas classified as historic monuments).
Do you need the help of a specialized lawyer?
Do not hesitate to contact us for any information and in case of specific needs. Our expert lawyers will be able to assist you in your restaurant audit process. Their expertise allows them to quickly estimate your legal risk and to offer you mechanisms to protect you from it.
In addition, don't forget that we offer you business transfer contract templates specially written for the needs of hotel and restaurant funds. See contract templates.
