Advice needed

helpme23

Both a bread run from a lad two years ago. The fella included 35 stops. One of them was going to be taken over by a new owners. So he told me. This never happened this shop went into receivership . So I am down over 6k in my own pocket. Now this fella wants me to pay him around 5k. Which we agreed on I signed a piece of paper saying I would pay him the rest of the money. But this fella told me the shop would open up it hasn't. I'm out pocket with the shop not opening . We're would you think I stand. ??

helpme23

Ok my story is to do with a buisnees I bought two years ago. It is a bread run. I purchased the business with an agreement in place to say I would pay the previous owner the remaining amount in a certain time. That was ok. I taught I was getting a good deal. Well it was not . I was told that I had 34 shops on my round with one shop that had closed and ready to be taking over by knew owners within a month.. the shop went into receivership and has not been opened and this two years ago. I'm still working on the bread round and now the previous owner is looking for the remainding 5 k he thinks I should pay. He was dishonest about the shop which never opened and I'm down over 5k from this shop. What could you do here ?? Very tricky ?? I'm not paying for something I didn't get so to speak.

Eric Cartman

What about the other 33 shops ? surely you saved your profits until the debt was paid ?

The old owner of the route didn't own the shop that closed , absolutely outside his control, you knew the shop wasn't open when you bought the run.

silverharp

can you clarify what you mean you are down 5K , 5k turnover or 5K profit from that shop? also how much did you pay per shop? .lets say you owe 5k out of an original purchase price of 50K then it wouldnt be fair to hold it all back however if you paid around 150K then 5k might represent the value of one shop to you for the past couple of years.

it comes down to what you negotiated, do you have anything in writing? if a new shop had opened would they have had to buy from you even? short of him absolutely lying to you that a shop was opening you dont really have a leg to stand on. you could try negotiate a discount based on what % that shop was of the whole business and see if he'd accept that he was over confident in his view at the time

Bandara

helpme23 wrote: »

Both a bread run from a lad two years ago. The fella included 35 stops. One of them was going to be taken over by a new owners. So he told me. This never happened this shop went into receivership . So I am down over 6k in my own pocket. Now this fella wants me to pay him around 5k. Which we agreed on I signed a piece of paper saying I would pay him the rest of the money. But this fella told me the shop would open up it hasn't. I'm out pocket with the shop not opening . We're would you think I stand. ??

Sorry but your post is very confusing

How are you down 6k ? the shop that went bust couldn't have owed you 6k ? Say your dropping 25 pans in there a day, that's only €550 a month they'd owe you ?

Is your issue is that one shop out of a promised run of 35 shops is no longer in business, that's 3% of your run, and in effect your most likely lucky it hasn't reopened as it would most likely go bust again and go down owing you a months money at least.

If this is indeed your issue that 3% of your customers are gone then I fail to see how you have a leg to stand on ? If 3 brand new shops has opened on your run and the guy selling it asking for 10% more money from you I doubt you would entertain him. Losing and gaining customers is part of business and the person that sold you the run has hardly misled you on one small customer to try to fool you !

Or have I misunderstood your post ?

helpme23

silverharp wrote: »

can you clarify what you mean you are down 5K , 5k turnover or 5K profit from that shop? also how much did you pay per shop? .lets say you owe 5k out of an original purchase price of 50K then it wouldnt be fair to hold it all back however if you paid around 150K then 5k might represent the value of one shop to you for the past couple of years.

it comes down to what you negotiated, do you have anything in writing? if a new shop had opened would they have had to buy from you even? short of him absolutely lying to you that a shop was opening you dont really have a leg to stand on. you could try negotiate a discount based on what % that shop was of the whole business and see if he'd accept that he was over confident in his view at the time

I only knew that the shop was going to open. He screwed me on the deal.

helpme23

helpme23 wrote: »

I only knew that the shop was going to open. He screwed me on the deal.

The shop was worth going by his records 650 a month. That is around 100 in profit that I should have on the grounds I was told it was opening in the near future. And if I knew that it was going into receivership i would not have agreed the terms with the seller. And I don't think anybody would.But I was told a different story. Sold a buisness that had some serious underlying cracks. The trade in the bread buisness now is highly competitive everywhere. I was told that business was in rising in sales and profits for the two previous years. Prior to me buying the round.. it is now only that I found out the business was in decline from the 2010 until 2014 and were it was heading till now. So I was lead down a rosy path.

Traq

helpme23 wrote: »

The shop was worth going by his records 650 a month. That is around 100 in profit that I should have on the grounds I was told it was opening in the near future. And if I knew that it was going into receivership i would not have agreed the terms with the seller. And I don't think anybody would.But I was told a different story. Sold a buisness that had some serious underlying cracks. The trade in the bread buisness now is highly competitive everywhere. I was told that business was in rising in sales and profits for the two previous years. Prior to me buying the round.. it is now only that I found out the business was in decline from the 2010 until 2014 and were it was heading till now. So I was lead down a rosy path.

Were you only told this and did you not check out any finances prior to buying the business?

dudara

Not a Personal Issue, moved to Entrepreneurial & Business Management, where I've merged your threads together.

In future please do not open multiple threads on the same topic.

dudara

dudara

OP - when you buy a business, you check it out, in a process called "due dilligence". You don't take the word of the seller implicitly. You examine the books, do some independent research etc.

You are claiming here that the seller knew the business was not going to reopen. Can you prove that?

gargargar

Reads like it is your own fault. As dudara said you didn't go through due diligence. You were naive to buy a business on someone's word. You may have to chalk it up to experience.

DubTony

helpme23 wrote: »

The shop was worth going by his records 650 a month. That is around 100 in profit that I should have on the grounds I was told it was opening in the near future.

At €650 a month this shop was effectively doing less than €25 a day based on a 6 day week, with a profit to you of less than €4 a day (your calculation). So every day you drive to this shop, stop outside and get out of your truck/van, walk to the back and open the door. Grab a board and put a few pans on it, a soda or two, the odd brown, maybe a bread roll (for Mrs. O'Brien down the road). You then bring it into the shop, tidy up your spot on the shelves, pull out returns, write the docket, ask the guy to check it in, wait for him to check it in, pack your bread onto the shelves, grab your board and leave (probably with some returns you lose on). Put the board back into the truck, close the door, get back in and drive away.

I wouldn't do that shop for that money if all I did was write the above paragraph every day. Starting the van after you leave is taking your profit. I'd be glad it's gone. Now go make it back by providing a better service to one of the other customers.

edit: I just realised you never actually serviced this mini conglomerate. I can't see how you can justify holding back 5k for this one. As for being out 6k? I don't think so. This shop never opening again actually saved you money.

helpme23

DubTony wrote: »

At €650 a month this shop was effectively doing less than €25 a day based on a 6 day week, with a profit to you of less than €4 a day (your calculation). So every day you drive to this shop, stop outside and get out of your truck/van, walk to the back and open the door. Grab a board and put a few pans on it, a soda or two, the odd brown, maybe a bread roll (for Mrs. O'Brien down the road). You then bring it into the shop, tidy up your spot on the shelves, pull out returns, write the docket, ask the guy to check it in, wait for him to check it in, pack your bread onto the shelves, grab your board and leave (probably with some returns you lose on). Put the board back into the truck, close the door, get back in and drive away.

I wouldn't do that shop for that money if all I did was write the above paragraph every day. Starting the van after you leave is taking your profit. I'd be glad it's gone. Now go make it back by providing a better service to one of the other customers.

edit: I just realised you never actually serviced this mini conglomerate. I can't see how you can justify holding back 5k for this one. As for being out 6k? I don't think so. This shop never opening again actually saved you money.

Nope it didn't save me money. The shop was included in the round. The shop I was told will open in a few weeks. I would be in the shop . The amount the account from the shop would take would be 650 a month. The shop never opened since 2014..I bought the round . 35 shops that was part of the deal. I was told the shop would open in a few weeks . In the overall price I will be paying for 35 shops and I'm only getting 34. I'm at the lost of the shop which the previous owner said was going to open. Thats how simple it is. Would you pay for something you were told you were going to get ????

helpme23

helpme23 wrote: »

Nope it didn't save me money. The shop was included in the round. The shop I was told will open in a few weeks. I would be in the shop . The amount the account from the shop would take would be 650 a month. The shop never opened since 2014..I bought the round . 35 shops that was part of the deal. I was told the shop would open in a few weeks . In the overall price I will be paying for 35 shops and I'm only getting 34. I'm at the lost of the shop which the previous owner said was going to open. Thats how simple it is. Would you pay for something you were told you were going to get ????

And you ended up didn't get ??

jimmii

This is the hardest thread to follow in a long time!

Why did you buy the supply to a shop that was closed? Its not the previous persons fault they didn't re-open but there should have been an agreement you would only pay for that shop when they had opened up again. Hard to see what you can do now probably time to forget about it and move on.

Mr Clonfadda

Based on your figures you are at a loss of €100 a month profit for two years that adds up to €2400

If you agreed to a clause on a reduction the final amount based on loss of business you may be able to negotiate a reduction from the final payment.

However if you didn't agree this you would still owe €5k even if all the shops had shut.

Eric Cartman

OP , this is business , a salesman sold you a route, you didnt do your checks , that was it.

You are looking for somebody to come on here and say "yeah, keep the money" . Thats not going to happen. Pay the guy the 5grand . Its not his fault the shop went into receivership.

helpme23

Eric Cartman wrote: »

OP , this is business , a salesman sold you a route, you didnt do your checks , that was it.

You are looking for somebody to come on here and say "yeah, keep the money" . Thats not going to happen. Pay the guy the 5grand . Its not his fault the shop went into receivership.

This guy knew the shop was closing. He told me it would open in a few weeks. It didn't . So I'm paying him for that shop as well. I don't think so.

Hanley

It's simple...

You got 34 out of 35 shops.

That's 97.1%.

You owe the man €5,000.

Pay him.... 97.1%.

€4,857.

Or just pay him what you owe him.

Hanley

Also... assuming every shop was worth even 50-100% of the profit on the shop you 'lost', ya shoulda banked €21,000-€42,000 in profit each year. Which should be loads to pay him back with.

porsche boy

It sounds to me like there isn't a written contract, would that be right? How does someone part with money without having triple checked everything?
Another point is the seller might have been told that the shop was going to re open and passed on that information to you, after that things may have changed. To be honest though any dispute like this will come down to whats written ina contract not whats said.

DubTony

OP you're out less than €4 a day GROSS!

If the gross profit from the entire run was calculated this shop would have no impact whatsoever, You have ignored the costs if you'd had to supply this store. This shop would have cost you to service. You were effectively given an interest free loan by the seller to purchase the round and now you're looking for a way to not pay up.

There's a lot of trust proffered in this kind of arrangement. The seller wasn't some faceless bank. I suggest that if the shop had reopened and increased turnover 10 fold you wouldn't have offered the him extra compensation.

helpme23

DubTony wrote: »

OP you're out less than €4 a day GROSS!

If the gross profit from the entire run was calculated this shop would have no impact whatsoever, You have ignored the costs if you'd had to supply this store. This shop would have cost you to service. You were effectively given an interest free loan by the seller to purchase the round and now you're looking for a way to not pay up.

There's a lot of trust proffered in this kind of arrangement. The seller wasn't some faceless bank. I suggest that if the shop had reopened and increased turnover 10 fold you wouldn't have offered the him extra compensation.

No in my book you do not pay for a promise. Not paying for a shop that never opened. He told me the shop would open in a few weeks it didn't. So what I'm expected to pay for something I didn't receive. It's a very good one people think that I should pay. If I go to sell the business do I include this shop in the sale??? Would you ??? Dub Tony

helpme23

porsche boy wrote: »

It sounds to me like there isn't a written contract, would that be right? How does someone part with money without having triple checked everything?
Another point is the seller might have been told that the shop was going to re open and passed on that information to you, after that things may have changed. To be honest though any dispute like this will come down to whats written ina contract not whats said.

Yea there is a pen and paper not written by a solicitor.

OttoPilot

How did he know the shop wouldn't reopen? Does he own it?

TBH you don't have a leg to stand on if you didn't write into the contract that 5k would be withheld if that shop didn't open.

Tippex

helpme23 wrote: »

No in my book you do not pay for a promise. Not paying for a shop that never opened. He told me the shop would open in a few weeks it didn't. So what I'm expected to pay for something I didn't receive. It's a very good one people think that I should pay. If I go to sell the business do I include this shop in the sale??? Would you ??? Dub Tony

The guy you bought the round off has no influence over whether the shops on the round open or close or even the amount of bread they sell.

as far as I can tell he can say that he was lead to believe that the shop would open but absolutely nothing to do with him.

DubTony

helpme23 wrote: »

No in my book you do not pay for a promise. Not paying for a shop that never opened. He told me the shop would open in a few weeks it didn't. So what I'm expected to pay for something I didn't receive. It's a very good one people think that I should pay. If I go to sell the business do I include this shop in the sale??? Would you ??? Dub Tony

I'll finish with this. If you insist on with-holding money you should at least have a basis on which to do it.

Here's how to work it out.
Take the €650 that the shop was supposed to be doing and divide it by the combined monthly revenue the round was doing when you bought it.
Multiply the result by what the round cost (including the 5k).

The answer is the max amount you should be considering discounting from the original sale price, as it represents the true gross value of that particular shop within the group of shops.

If you want to reveal your numbers I'm sure there's somebody here who'll be happy to advise you.

Bandara

Your just trying to justify not paying the amount you agreed for your round

Every person here has said that your wrong and that one shop out of 35 is irrelevant to a deal

You can go down the legal route but you'll find you have not go a leg to stand on, you say you have a contract written where it says you will pay X amount for your round of 35 shops, unless that contract covers what happens in the event of one shop not being in business then your going to be going in front of a judge to decide, and that's not going to go well for you

Pay what you agreed and move on. You earnings are not effected by 3% of turnover gone, in fact your earnings from this shop would have cost you money.

Your logic makes zero sense and any legals will result in your paying up and then paying fees on top.

Your simply looking for a reason not to pay and this extremely tenuous one is what you have decided is your best option

antoinolachtnai

I can see what your difficulty is in business terms. If the net margin of the business is very tight, then the extra business might have made a big difference to profitability.

But it isn't as simple as that either. Presumably these 35 shops are in the same general locality. If so, then many of the end-customers who would have bought the bread in the closed shop (had it been open) presumably bought their bread in another shop up the road instead, so you would have benefited from a proportion of the sales anyway.

If you signed a loan note which was unconditional, you are not, in legal terms, in a great situation. Enforcing the loan note has basically nothing to do with the quality of the asset in a situation like this..

If you have signed a simple loan note, I suspect you are at a disadvantage, in that the vendor may have had the benefit of legal advice, and you did not.

If this guy issues proceedings against you in the District Court, I don't see how you are going to avoid having to pay. An oral undertaking in relation to something that the vendor had absolutely no control over is not going to change anything (even if you could prove that he gave the undertaking).

The best thing to do is likely to be to negotiate a few extra months of credit from him and pay in instalments.

antoinolachtnai

I can see what your difficulty is in business terms. If the net margin of the business is very tight, then the extra business might have made a big difference to profitability.

But it isn't as simple as that either. Presumably these 35 shops are in the same general locality. If so, then many of the end-customers who would have bought the bread in the closed shop (had it been open) presumably bought their bread in another shop up the road instead, so you would have benefited from a proportion of the sales anyway.

If you signed a loan note which was unconditional, you are not, in legal terms, in a great situation. Enforcing the loan note has basically nothing to do with the quality of the asset in a situation like this..

If you have signed a simple loan note, I suspect you are at a disadvantage, in that the vendor may have had the benefit of legal advice, and you did not.

If this guy issues proceedings against you in the District Court, I don't see how you are going to avoid having to pay. An oral undertaking in relation to something that the vendor had absolutely no control over is not going to change anything (even if you could prove that he gave the undertaking).

The best thing to do is likely to be to negotiate a few extra months of credit from him and pay in instalments.

newacc2015

helpme23 wrote: »

No in my book you do not pay for a promise. Not paying for a shop that never opened. He told me the shop would open in a few weeks it didn't. So what I'm expected to pay for something I didn't receive. It's a very good one people think that I should pay. If I go to sell the business do I include this shop in the sale??? Would you ??? Dub Tony

If the shop was going to 'open'. Why didn't you put it as a condition of the contract. ie I will pay you €20k for this business with 34 stores and an additional €1k when the 35th store opens. I imagine a solicitor would have done this, but instead you choose to save probably €100 (which is tax deductible ) on a DIY contract. There is nothing wrong with a DIY contract, but not when buying a business

I honestly can't see how you thought this business was a growing industry. People are eating less bread than ever, due to people being more health conscious. Plus people dont want to pay €2.50 for a loaf that is almost identical in Lidl for 60 cent.

You can't penalise someone else for you lack of research into this industry. If this shop was just about to be opened. Did it ever occur to you to call the owner and ask what is happening with it?

Since you have had this business for 2/3 years. What other shops have you tried to get business off? You have placed such a great importance on a single store and wasted such energy on it. Yet you have not mentioned whether you have tried to get new business.

Write this mistake off and try focus your energy on worthwhile things like getting new shops.