You, as the business seller or business vendor have a duty of care to supply the correct information to any prospective purchaser. There may be legal implications for misrepresentation.
Never overstate the takings, the gross profit or net profit of the business. The Business Purchaser has a right to undertake due diligence on the business. Make sure document information is available for due diligence. Do not provide any incorrect information, as this will be discovered during the due diligence process.
Disclosure is the key. Don’t hide bad news from the Purchaser. Disclose any restrictive covenants, any WorkCover claims or anything that might impact on the profitability of the business in the future.
Be prepared for a Restraint of Trade in the Sales Contract. Many Business Sellers don’t understand that the Purchaser, when paying for a business, has the right to protect the goodwill of the business they are purchasing. A Restraint of Trade will prevent the Business Seller from operating a similar business for some years and within a geographic area.
If you are operating under a licence, make sure there are no breaches of the licence agreement. Just remember that it is the licensor that decides if the purchaser is suitable to operate your business.
If you have a food premises permit, then ensure that you have an up to date health inspectors report.
If you own a franchised business, ensure that you are clear on the transfer process requirements of your master franchisor and the costs involved to you to transfer the franchise. Again, it is the franchisor who decides if the purchaser is suitable to operate the business.
Make sure that you or your business have not contravened any Commonwealth Laws, Employment Laws, Environment Protection Laws or State Consumer Protection Laws or any other laws that may apply to your industry type.