Many people who are interested in being their own boss will consider buying a retail store. Investing in a pre-existing business has some advantages because someone else has already invested the time to the open the store, market it and build a customer base.

But before buying a retail operation, consider the following legal issues:

Can you assume the lease? The location can make or break a retail location, and if you're buying a business that's successful, you don't want to take unnecessary risks with that success by changing locations. Before agreeing to buy the business, review the lease, ensure that it can be transferred or assigned to you, and confirm that the lease can be extended into the future.

Have the seller sign a non-compete agreement or agree to a consulting contract. Assuming the seller has made the retail store into the success it is today, the last thing you want him or her to do is to open a new, competing store. You can ensure against this by putting language into the sales contract that forbids the seller from opening a similar store within a certain radius of the store you're buying. Or, you could contractually agree to hire the seller as a consultant, manager or employee for a certain period of time.

Investigate whether licenses and permits can be transferred, or if you'll have to reapply. Different municipalities will have different laws regarding business licenses and permits. Because the government makes money from the fees for licenses and permits, some agencies will require you to get new permits or licenses if you buy a business. In other instances, the permit or license may be transferred along with ownership of the business.

It's important to investigate this before agreeing to buy a store, because if you're unable to transfer the licenses and permits, or easily acquire them, it could potentially force you to shut the business's doors for months. For example, the number of liquor permits or licenses is limited in some jurisdictions. If you're buying a liquor store and are unable to transfer an existing permit or license, you may be unable to operate your new business.

Have a lawyer review all existing contracts. Depending on how you structure the purchase, you may be assuming the obligations of any and all existing contracts. Before agreeing to buy a retail operation, review these contracts and agreements with a lawyer so you thoroughly understand your obligations.

Questions for Your Attorney

A small-business attorney or attorney who specializes in acquisitions can help you do your due diligence before buying a retail operation.

Among the questions to consider asking your lawyer:

  • Have you previously worked with people who were buying or selling a retail store?
  • What legal issues should I be aware of?
  • What future obligations will I have under the existing contracts?
  • How much do you charge for your services?