Before you decide to list your cafe for sale, there are a number of documents you need to supply so that the information can be provided to prospective buyers. There are a number of samples below of the documents required as well as the details of the exact nature of these documents.
The Lease Agreement
Each state and territory in Australia has specific laws in relation to retail lease agreements. A retail lease refers specifically to the commercial lease allowing you rental of a specific retail premises. Check that your lease complies with the relevant legislation.
What do retail premises mean?
With very few exceptions, legislation defines retail premises as premises which are used for hiring, selling or providing services or goods to the general public. These include businesses such as restaurants, bars, car rentals, banks, law firms and so forth. Where premises are used for storage, manufacturing and wholesaling, they are not considered retail premises. The premises where your cafe is situated would be considered retail premises.
Lease Disclosure Statement
Ask your landlord for the disclosure statement in which the main features of the lease are detailed. This allows you as the tenant to know exactly what is being offered and what you are agreeing to at the start of the lease. This will also help a prospective buyer of your cafe to know what is expected under the lease terms.
The Vendor Statement
The Vendor Statement is also referred to as a section 52 statement under the Estate Agents Act of 1980. This is a document that you, as the owner of the cafe for sale, must provide to the prospective buyer if your cafe is being sold for $350 000 or less. There are specific points on there that you might want to review closely such as the stock, expenses and profits of the business as this will be invaluable to a prospective buyer.
Statement of Profit and Loss
The profit and loss statement or income statement is an accounting document which summarises the business’ monthly, quarterly or annual financial performance. This will clearly show the historic performance data of your cafe and will show the current trend of the business. This specific document will show whether or not your business has made a loss or a profit over a period of time by comparing the expenses and income over the same period of time. Expenses subtracted from the Income will show if the cafe has been making any profit over the time period.
The Balance Sheet
A crucial document in determining the liquidity of a business, the balance sheet helps identify trends. This document also allows a prospective buyer of your cafe for sale to see the potential capabilities of your business as well as current financial strength. Banks, investors and other stakeholders in a business generally use the balance sheet as the main financial report of the business. This document clearly shows what the business owes (liabilities) as well as its physical holdings (assets). This document will also reflect what the net worth is of your cafe at a specific point in time. Owner’s equity is the value that is made up from the difference between the liabilities and assets. Balance sheets must balance and this balance is normally obtained by the sum: assets – liabilities = equity. This is generally a positive value in a healthy business.
Equipment and plant register
When planning to sell your cafe, you would also need to provide a register which details all the property, plant and equipment you have purchased for the business. The register would show when you purchased the item, how much you paid, details of the item and where the item is located. The register should also show depreciation and current asset value. Items of the same type, in the same location can be grouped together in the register such as cutlery in the kitchen, while cutlery in the eating space may need to fall under a different heading.
If required, the franchise agreement
This document will only be applicable if your cafe for sale is part of a franchise. You and the franchisor would have signed this document when you established your cafe as part of the franchise and this would be a legally binding contract. This document may differ substantially depending on state jurisdiction as well as the franchisors.
Even business would have some business licenses and permits which would need to be presented for the sale of the cafe. This can include:
● Liquor licenses
● Council permits
● Travel agent licenses etc
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