A business opportunity agreement is a business investment that is packaged and ready for the buyer to begin business. It is a contract/agreement that transfers ownership of a business from a seller to a buyer. With this type of business opportunity, there is no continued relationship between the seller and buyer.
A business agreement is also known as a business transfer agreement or a sales of business agreement. It can be used to buy or sell a variety of businesses, including restaurants, industrial shops, and retail stores.
The business agreement must include:
Purchase of Assets
When the assets of a business are purchased, only one aspect of it is being purchased, not the business itself. This means you may be buying a client list, product, or intellectual property. The company retains its tax filings, name, and liabilities.
Types of Included Assets
Types of Excluded Assets
Purchase of Shares
If a buyer purchases all shares in the company, they are purchasing a portion of all aspects of the business. If the buyer purchases all of the shares, they own all facets of the business.
Warranties and Clauses
A business agreement may include the following restrictive warranties or clauses.
Liability
If a buyer takes on the responsibility of a mortgage, loan, or the balance for accounts payables, they are assuming liability for the business. The buyer has the option to take on some or all of the liabilities or none that the seller accrued during the business's lifetime.
Typically, a seller setting up a business opportunity documents all key operational procedures involved with starting and running the business. This is usually accomplished by providing insightful manuals that the buyer would need to know based on the experience of the owner. The information provided should adequately cover the startup process, operations, and marketing.
The buyer will need to create a business plan on their own or with the help of a professional.
Once a business plan is in place and before opening for business, it is recommended that the buyer consults with an attorney to confirm that they are in compliance with any business opportunity statutes in the local area.
If you prefer the freedom of running your own business with interference, a business opportunity offers that platform. A franchise, on the other hand, requires that the buyer operate according to the specifications and programs of the franchise seller.
With most business opportunities, you buy the materials, equipment, etc. and open the business under your choice of business name. There are no royalties involved and no trademark rights sold.
Not all states operate the same when it comes to business opportunities. In California, the person handling the sale and purchase of small businesses must have a real estate license.
In 23 other states, laws exist that define business opportunities and regulate the sale of businesses.
Three of the most common types of business opportunities are distributorships, rack jobbing, and vending machine routes. Most states define a business opportunity as follows:
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