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  • #988154
    JAG77
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    Hi everyone,

    My partner and I are looking to buy a small retail business that has been neglected for some time now. We are under no illusions about the state of the business (as it really isn’t doing much of anything at the moment – the shop front is not running and the website is not doing much either). We believe there is still some value in buying it because we will obtain immediate stock, supplier relationships, website and customer database – hence could start selling online very quickly.

    My concern comes in because I have located 2 separate reviews of the business from within the past 3 months saying they placed an online order, paid for goods but never received them, and no refund has been forthcoming. So my question is: with the existing owner trading as a sole trader if we buy the business do we inherit any consumer disputes or liabilities? Essentially we don’t want to be stuck having to provide refunds for goods not delivered when it is the previous owner who would have pocketed the money.

    Many thanks in advance for any responses.

    #1165853
    MissSassy
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    This really is a legal question and will be part of your contract of sale.

    The reputation will follow and I am sure that if there is 2 there is bound to be more. Make sure you look into everything to decide how much additional work is required to turn things around once you do buy.

    #1165854
    Tony Manto
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    You really should talk to a lawyer however with the bad, comes the good. You can re-activate past customers that may have been unhappy. If this means resolving an old problem, what a better way to create a positive impact and turn a negative into a positive. I would send out a letter to all past customers and welcome feedback…

    #1165855
    Anonymous
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    Hi JAG77,

    That’s a great question, but as has already been mentioned, you’ll probably need some legal advice on it.

    Fingers crossed someone around here will be able to give you some general guidance.

    In the meantime, welcome to Flying Solo, and thanks for joining in :)
    Jayne

    #1165856
    Daniel Mitchell
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    Hi there

    Some great advice from Tony, and if you are looking to push past the negative reputation then resolving some of these issues would go a long way to establishing a loyal customer. Obviously you need to weigh up the cost vs benefit but I’d definitely suggest being open and forthcoming to the customers and attempt to move past their negative opinion of the business.

    I’m not a lawyer so take this advice as opinion, but you will just want to make sure that everything is fully documented in the contract of sale and that you have it drawn up (or at least verified) by a lawyer. As a sole trader you aren’t buying the business entity as such but will be purchasing the assets (client database, website etc.) and you will want to ensure that it is documented that you are not transferring any liability.

    As has been previously mentioned, just make sure you fully understand the benefits of keeping the business name as you could potentially purchase the other assets without keeping the name and reputation.

    Good luck.

    #1165857
    Diy Legal Kits
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    • Total posts: 16
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    My concern comes in because I have located 2 separate reviews of the business from within the past 3 months saying they placed an online order, paid for goods but never received them, and no refund has been forthcoming. So my question is: with the existing owner trading as a sole trader if we buy the business do we inherit any consumer disputes or liabilities? Essentially we don’t want to be stuck having to provide refunds for goods not delivered when it is the previous owner who would have pocketed the money.

    Your contract of sale would normally include a provisions similar to below.
    A. The debts of the Business incurred by the Vendor before Completion remain the responsibility of the Vendor.
    B. The Assets of the Business do not include accounts receivable owed to the Business before Completion.
    With the agreement of the vendor if you wanted to be perfectly clear you could simply add
    C. Any outstanding orders placed with the Vendor remain the responsibility of the Vendor.

    #1165858
    Gogiver3
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    • Total posts: 7
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    Hi prospective biz owner,
    your situation brings with it the actual legacy of the negative reviews-bad reputations can be turned around online-the first thing to do is do more digging and really evaluate the extent of the rot-because they are quite old is a good thing because the layers of internet activity cover it-the thing to do would be to hire an online marketing specialist company/freelancer to contact all previous negative report givers and offer a deal to gain a retraction, and fresh testimonial this could work in your favor because you can convert bad publicity into good and people respond to the storyline of a rescued business-a press release could be the thing here, don’t hold back the truth and this could create a ripple of interest in the ‘Niche Area’ and the emotional energy provide a real kick start-contact me for further ideas.
    Cheers
    Michael

    JAG77, post: 192050 wrote:
    Hi everyone,

    My partner and I are looking to buy a small retail business that has been neglected for some time now. We are under no illusions about the state of the business (as it really isn’t doing much of anything at the moment – the shop front is not running and the website is not doing much either). We believe there is still some value in buying it because we will obtain immediate stock, supplier relationships, website and customer database – hence could start selling online very quickly.

    My concern comes in because I have located 2 separate reviews of the business from within the past 3 months saying they placed an online order, paid for goods but never received them, and no refund has been forthcoming. So my question is: with the existing owner trading as a sole trader if we buy the business do we inherit any consumer disputes or liabilities? Essentially we don’t want to be stuck having to provide refunds for goods not delivered when it is the previous owner who would have pocketed the money.

    Many thanks in advance for any responses.

    #1165859
    Divert To Mobile
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    Hi Jag77

    A sole trader is an individual trading as, a registered trading name so I doubt it. However to be on the safe side, when doing the purchase be sure there is a clause in the sale contract that relieves you of the debts.

    Steve

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