Legal process for selling a Café or Coffee Shop

Legal process for selling a Café or Coffee Shop2017-10-31T12:09:31+00:00

Want to sell your café or coffee shop? Finding a suitable buyer is just the first step in what can be a complex process. In particular, if you occupy leased premises, you will have the added complication of seeking your Landlord’s consent to the sale (assignment) of the lease to a third party.

Step-by-step guide to selling your Café or Coffee Shop

Step 1
Once you’ve found your buyer, you’ll need to agree a deal price and structure.  This may involve some initial information sharing where a confidentiality agreement (also known as a non-disclosure agreement) is helpful. You will also usually be expected to sign a Heads of Terms or Memorandum of Sale too.

Although often expressed to be not legally binding, in practice, these documents are important for setting out yours and your buyer’s key expectations in relation to the deal. As such, you can gain significant value from a solicitor who specialises in selling cafés and coffee shops to structure these documents or to review the one provided by the agent. Make sure you appoint, or at least talk to, a solicitor before you sign even a non-binding Heads of Terms or Memo of Sale.

Step 2
Due diligence
– this is the investigatory stage of the process where the buyer seeks to establish what it is he or she is buying.  Astute sellers will work closely with their legal advisers at this stage to package the business data and documentation – warts and all – in the best possible light and, if appropriate, to release more sensitive information only at later stages. 

Full disclosure should be the aim but an experienced solicitor will manage this process efficiently and to your advantage.  At Truelegal we make full use of virtual datarooms for due diligence which greatly enhances speed, transparency, efficiency and traceability.  It allows you to share information confidentially with your buyer without the hassle of managing mountains of paperwork.

Step 3
The Business Sale or Purchase Agreement is the key document, together with the related Disclosures.  Often the agreement will run to 20 pages or so with much of the document dedicated to warranties and indemnities which you, as seller, will be asked to give. 

It is essential you understand what you are agreeing to otherwise you may find yourself the subject of a warranty claim after completion.  This can and should be avoided by using a solicitor experienced in reviewing warranties to give proper disclosure of all aspects of your café business.

Step 4
Alongside the main agreements there will be other issues where advice is required.  A prime example is dealing with employed and temporary staff. Where you are selling the business goodwill (rather than shares) you will need to become very familiar with TUPE legislation, which has a number of pitfalls for ill-advised sellers. 

Another area where café and coffee shop sellers often come unstuck is underestimating the process of getting consent from landlords, finance companies or banks to the transfer of the business and associated property leases, equipment leases or bank loans and overdrafts.  If you want to avoid frustrating delays, it’s important to seek these consents at an early stage – and we can help you do that.

Make a free enquiry

The sooner we become involved in the process of helping you to sell your Café or Coffee Shop the more likely it is that your sale will be successful, so please contact us today.

Please either call us now on 01392 879414 or complete our Free Online Enquiry and we will soon be in touch.

Our full contact details can be found on our Contact Us page.

We look forward to hearing from you.

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Exeter Office

Truelegal Solicitors 76 Fore Street, Topsham Exeter, Devon, EX3 0HQ

Tel: 01392 879414