Commercial Law

Most business purchases are asset purchases, meaning that you are buying the “assets”

of the company, such as their equipment and inventory. In contrast, “share” purchase is when you take over the company completely, including their business bank accounts. This process is integral to commercial business law.

During this process, you must ensure that the assets you purchase are debt-free and litigation-free, so you are not inheriting those costly problems down the line. At Varity Law, we will ensure:

• Your Agreement of Purchase and Sale is well drafted, so any common problems such as debt inheritance and closing day costs adjustments are anticipated and avoided;
• Your purchased assets do not have any registered debts or litigation – we will do a full business search on those goods;
• The assets indeed belong to the seller (aka it is theirs to sell) and will be properly transferred into your name (whether personal name or company name)

Furthermore, understanding the importance of financing in asset acquisition, Varity Law also specializes in real estate secured lending, ensuring your investment is protected through secured transactions. 

Most sellers do not own their shop but lease it from their landlords. Thus, for many business asset purchases, lease assignment (landlord agreeing to transfer the lease from seller to buyer) is a normal part of the process.

Lease agreements usually lasts for 5- 10 years. If the tenant breaches the contract, then they may have to pay the landlord all rent owing to the date of lease expiry. That sounds like a huge responsibility! Thus, it’s crucial to have your lawyer review the agreement before you sign on the dotted line. Specifically, in the context of commercial business law, we will pay attention to:

• Are you allowed to transfer the lease to another person or company when you sell your business one day? If you cannot, then you must honour the lease until its expiry.
• Can the landlord move you to another location with similar size? This is important because many customers would remember your business based on your location.
• Are you free to do renovations as you please? Or does the landlord need to pre-approve every step? The finished renos, do they belong to the landlord or to the tenant?
• Must you do a personal indemnity? If the landlord requires you to do a personal indemnity and you miss rental payments, then the landlord can claim for your personal assets such as your house, bank accounts, and vehicles.

For buyers wanting to take over a mature business, franchising is appealing. It usually comes with an established clientele and goodwill, equipment and staff, and management structure. On the other hand, the head office typically have strict rules regarding your operations, sales targets, and the royalties it will collect.

Intellectual property including logos, business names, software, etc. are also a big part of many business purchases. The Varity Law team will ensure you understand exactly what you are buying or selling. Specifically, our services include:

• Review and edit any franchising legal agreements, with a special focus on termination clauses;
• Clearly explain the use of intellectual property and its transfer & return;
• Analyze the franchisee’s rights to ownership and profit-sharing, including commercial law services.

For expert advice on franchising and intellectual property in commercial business law, consider consulting a wills and estate lawyer in Richmond Hill for tailored support.