Salon Question

[AmazingNails]

Good evening everyone,

Happy New Year, may you all enjoy a year full of abundance.

Ok so I am working in a small salon I'm the only tech, also making payments to the owner for the ownership of the salon. I want to change the name of the salon. My question is once I'm the legal owner operating under a new name, hence a new business, while I still have to honor and gift certificates sold by the previous owner or inherit any debt that he has?

Thank you so much for your help
Isabel

[Tashawna]

If it is a new entity, you do not have to BUT you may gain/keep clientele by honoring them in full or half price. Example a $50 giftcard would be worth $25. It would benefit you to post something about the change beforehand and tell current clients to use these cards by x/x/x.

[Tn Nail Lady]

I would just make sure to get it in writing that I did not take any of his debt. I woouldn't think you will but.........
As for gift certificates, he needs to let the clients that have them know he has sold the salon and that the GCs need to be redeemed before a certain date before you take over because you will not accept them. But...I think if there aren't many I would honor them- the clients will love you for it and possibly stay with you. If there are GCs for your services, I would honor those- that is your client, even if he does get the money. But again that can be worked out- he can give you a set amount to honor them. Talk it all over BEFORE this is a done deal.

[sobeit]

I worked for a place that knew they were changing hands, they still sold CG knowing the new owners wouldn't honor them as they don't get paid for them. I viewed this as theft from the current owner and unfair to the coming owner and very tacky on behalf of the clients who paid for something they couldn't use. GC can never expire when they are bought so if you don't honor them and old owner doesn't refund them or give fair notice with offers to refund the old owner may be looking at lawsuites. If it were me buying the shop I would honor them to keep clients and to look good in their eyes. Money is so tight it could be a serious offense in their eyes and that could look bad even though it's not you.

[CloudNineNails]

When i went independent it was right after the holidays so i knew gift cert had been bought ith the intention of the client to come to me but they were for my old salon. I agreed to honor those to keep my client and so they didnt feel cheated. I lost money yes but keeping a repeat client is worth losing a few $$. You need to check your contract with the previous owner to make sure you are not getting his debt. No offense but you should have checked that before You bought in. technically you shouldn't tho if you are a new entity with a new license and name.

[Toothypegs]

My question is once I'm the legal owner operating under a new name, hence a new business, while I still have to honor and gift certificates sold by the previous owner or inherit any debt that he has?

Depends on what part of the business you are buying. You don't mention this. You just say that you are 'making payments for ownership of the business' so I assume it's their whole business you are purchasing. Does the purchase contract not state where the debts are going? If not, it should. (Please tell me you have a contract).

If you are buying the owner's business lock, stock and barrel then the answer is yes, you also inherit the debts the business has unless otherwise underwritten. This is why lawyers are involved in a business purchase as a clause is usually inserted to pass on debts incurred by the current business owner unless you agree to 'buy' them.

A new name and/or owner does not make a business new.


(Yes, I'm Australia but the US and Aussie systems work under a common law system based on the Westminster system and operates under the same principles).