Buying a Restaurant in Queensland: What Legal Steps are Involved?
A Practical Guide for Buyers in Brisbane and Queensland
Buying an existing restaurant, café, takeaway shop or bubble tea business can be an exciting opportunity. Many buyers find businesses for sale through online platforms such as Seek Business, AnyBusiness and commercial business brokers.
However, purchasing a restaurant involves more than signing a contract and paying the purchase price. Buyers must also consider commercial leases, food business licences, employees, equipment, tax obligations and settlement requirements.
This guide outlines the key legal steps involved in purchasing an existing restaurant business in Queensland.
1. Reviewing and Signing the Business Sale Contract
The first step is to review and negotiate the Business Sale Contract.
The contract should clearly set out:
Purchase Price and Deposit: The agreed purchase price, deposit amount and payment arrangements.
Settlement Date: When ownership of the business will transfer.
Assets Included: Equipment, furniture, stock, goodwill and other business assets.
Due Diligence: Whether the purchase is conditional upon satisfactory financial and legal investigations.
Lease Assignment: Whether the purchase is conditional upon the landlord's consent to transfer the existing lease or grant a new lease.
Other Conditions: Any finance, licensing or other approvals required before settlement.
Buyers should seek legal advice before signing the contract or paying a deposit to ensure their interests are adequately protected.
2. Conducting Due Diligence
Before committing to the purchase, buyers should investigate the restaurant's financial performance and legal compliance.
Important matters to review include:
Financial statements, sales records and profit margins.
Business Activity Statements (BAS) and relevant tax records.
Existing liabilities and outstanding debts.
Ownership and condition of kitchen equipment and other assets.
Food safety and regulatory compliance.
Existing supplier agreements and other ongoing obligations.
Any security interests registered on the Personal Property Securities Register (PPSR).
A thorough due diligence process can help identify potential financial or legal risks before settlement.
3. Transferring the Commercial Lease
For most restaurant purchases, the commercial lease is one of the most important aspects of the transaction.
If the restaurant operates from leased premises, the buyer will usually need to arrange either:
Assignment of Lease: The existing lease is transferred from the seller to the buyer with the landlord's consent; or
New Lease: The buyer negotiates and enters into a new lease directly with the landlord.
Before proceeding, buyers should carefully review:
The remaining lease term and any renewal options.
Rent and outgoing expenses.
Rent review provisions.
Permitted use of the premises.
Personal guarantees and security deposit requirements.
Make-good obligations at the end of the lease.
Where the Retail Shop Leases Act 1994 (Qld) applies, additional disclosure requirements may arise.
For example, in an applicable retail shop lease assignment, the seller is generally required to provide the prescribed disclosure statement and a copy of the lease at least seven days before the buyer enters into the Business Sale Contract, unless a valid waiver or statutory exception applies.
Failure to properly address lease matters can delay settlement or affect the buyer's ability to operate the restaurant.
4. Applying for a Food Business Licence
In Brisbane, a restaurant generally requires a Food Business Licence issued by Brisbane City Council.
An existing Food Business Licence cannot simply be transferred from the seller to the buyer.
The buyer will generally need to apply for a new licence in their own name or the name of the purchasing entity.
Buyers should also check:
Whether the premises comply with food safety requirements.
Whether an appropriately qualified Food Safety Supervisor has been appointed.
Whether any outstanding food safety or compliance issues exist.
Whether additional approvals are required for the intended operations.
It is advisable to investigate these requirements early to minimise interruptions to business operations following settlement.
5. Transferring the Business Name and Other Licences
If the purchase includes the existing restaurant's business name, the parties should arrange for the business name to be transferred through the Australian Securities and Investments Commission (ASIC).
Depending on the business, the buyer may also need to:
Obtain or update an Australian Business Number (ABN).
Register for GST and other applicable tax obligations.
Arrange the transfer of a liquor licence, where applicable.
Obtain any other required operating permits or approvals.
Arrange appropriate business insurance.
If the restaurant sells alcohol, the buyer should confirm the requirements for transferring the existing liquor licence with the Queensland Office of Liquor and Gaming Regulation.
6. Employees and Tax Considerations
If the buyer intends to retain existing employees, it is important to address their employment arrangements before settlement.
Relevant matters may include:
Whether employees will be offered employment by the buyer.
Accrued annual leave and long service leave entitlements.
Outstanding wages and superannuation.
Applicable awards and employment conditions.
Responsibility for employee entitlements under the Business Sale Contract and applicable employment laws.
The purchase may also involve several tax considerations.
GST and Going Concern
A business sale may qualify as a GST-free supply of a going concern if the relevant requirements under Australian tax law are satisfied.
Transfer Duty
Transfer duty may apply to the acquisition of certain business assets in Queensland, including goodwill and other applicable dutiable property.
Buyers should seek appropriate legal and accounting advice to understand the tax implications of the proposed transaction.
7. Completing Settlement
Settlement is the final stage of the business purchase process.
Before settlement, the parties and their legal representatives should confirm that the relevant contractual conditions have been satisfied.
Settlement arrangements may include:
Payment of the balance of the purchase price.
Adjustments for rent, outgoings and stock.
Transfer of relevant business assets.
Release of applicable security interests.
Handover of keys, equipment and business records.
Completion of the lease assignment or new lease arrangements.
Confirmation of relevant licensing and operational arrangements.
After settlement, the buyer should ensure that all necessary registrations, licences, insurance and supplier arrangements are in place before commencing business operations.
Conclusion
Purchasing a restaurant, café or takeaway business in Queensland involves several important legal and commercial considerations.
From reviewing the Business Sale Contract and conducting due diligence to arranging the commercial lease and completing settlement, careful preparation can help buyers avoid unexpected liabilities and unnecessary delays.
Obtaining legal advice at an early stage can make the transaction smoother and provide greater certainty when taking over an existing business.
How R&G Law Group Can Help
At R&G Law Group, we assist clients with business purchases and sales, commercial leasing and related legal matters throughout Brisbane and Queensland.
Our services include:
Reviewing and negotiating Business Sale Contracts.
Advising on legal due diligence.
Reviewing commercial leases and arranging lease assignments.
Liaising with landlords, agents and other parties.
Preparing and reviewing transaction documents.
Assisting with settlement and related legal requirements.
If you are considering purchasing a restaurant, café, takeaway shop or other business in Queensland, contact R&G Law Group to discuss your proposed purchase and obtain legal advice tailored to your circumstances.
Disclaimer: This article provides general information only and does not constitute legal advice. Legal requirements may vary depending on the nature of the business, transaction structure and individual circumstances. You should obtain professional legal advice before entering into a business purchase transaction.