COUNTING THE COSTS
What can you expect your lawyer to charge?
How much can you expect to pay your lawyer for advising you on buying your franchise business? There is no simple answer to this, because fees will vary from firm to firm; some lawyers charge by the hour while others provide a flat-fee structure.
Here is an outline of the fee-charging activities your lawyer is likely to undertake, and a guide to other costs you might need to meet…
Typically your lawyer will
• the proposed contract of sale, plus explain your rights and obligations under the contract and negotiate any necessary changes, especially those that will give you a right to terminate without penalty if, for instance, you are not satisfied with the franchise agreement or the franchisor does not agree to grant you the franchise
• the lease, plus prepare any disclosure statements under the applicable retail leases legislation, review the landlord deed of covenant and prepare the deed of assignment of lease
• the franchise agreement, plus provide you with advice about it and undertake any necessary negotiations on your behalf.
UNDERTAKE due-diligence which will incur search fees.
PREPARE stamp-duty declarations and
inquiries, attend to stamping of the documents in the relevant states or territories.
There is no easy answer as to how much legal advice will cost when you are buying into a franchise as there are many variables to be considered.
ATTEND t o a ny a djustments t o t he purchase price, including provision for employee entitlements.
LIAISE with y our bank o r financial i nstitution if you have obtained finance.
Regardless of the size, price or type of business, these activities usually entail a substantial amount of work.
Search fees are usually relevant if it is a food business, as this usually requires a council inspection to ensure the premises comply with regulations.
Other factors will impact upon the search fees, such as the entity selling the business. If you are buying a food business, it is suggested you allow about $600 to $700 in search fees.
If it is not a food business, then your search fees should be around the $300 mark.
Stamp duty is not payable in all states and territories when buying a business. However, if it should is payable, it is calculated on the purchase price. Ask your lawyer about the cost as it varies. LEGAL FEES
Again, your legal fees will vary depending upon the type of business and, of course, varies between law firms.
For a standard transaction (as an indication only) you should allow between $5000 and $6000, plus GST. However, for a larger, more complicated business transaction (for example a restaurant), you could be paying between $10,000 and $15,000 GST.
You may also need certain licences to run your business, and these may involve fees. These licences vary according to business type and the local council.
Licences you may need include:
• Music – to play music or the radio in your business (the licence ensures the artists are compensated)
• Business name registration
• Food hygiene – required when your
business involves food preparation • Trade waste – for food and other busi
nesses that produce waste
• Signage and advertising – required by
some local councils
• Outside dining permits – dependent upon the council.
When you engage your legal advisor, ask them not only for a quote that includes the hidden extras such as stamp duty, search fees and licence costs.