SELLING THE SALON "RENT TO OWN"

[parrot head]

I'm knocking around, an easier way for someone to buy our salon. Has anyone ever sold your salon contents "rent to own"? I would require they pay for the lotion inventory and for the new lamps which we just purchased. I would do a rental lease for the building, and a 5 year rent to own agreement. I would require a damage deposit both ways. What am------------------------
I not seeing here, as in the forest for the trees?

[peach]

Originally Posted by parrot head

I'm knocking around, an easier way for someone to buy our salon. Has anyone ever sold your salon contents "rent to own"? I would require they pay for the lotion inventory and for the new lamps which we just purchased. I would do a rental lease for the building, and a 5 year rent to own agreement. I would require a damage deposit both ways. What am------------------------
I not seeing here, as in the forest for the trees?

That is the same thing as financing a salon purchase which I have done before. I required a lump sum payment each year on March 31, (when I knew they had some money) Eventually had to repo it but at least I got some money out of it and didn't have to be there every day.

[Turbo Girl]

It would be an installment agreement and you would set the terms as you see fit.

[parrot head]

How would the insurance on the contents be handled. I still would own the beds, but they would not be in my control. The business would be in the new owners name. I would still have to insure the contents, correct?

[Turbo Girl]

What you described in your OP, it is an owner finance agreement.

In this way, you would basically do an Agreement To Sell Business with a "Schedule A Equipment", (and so forth for inventory, etc) attached along with a Promissory Note listing terms.

With this way, it becomes their responsibility to insure equipment, payroll, and everything. Pick very wisely my friend and do your homework on them so you don't end up with a defaulted run down salon!

[eileen]

Would they be renting to own your business name as well? If so what happens if they default and you get left with the tan tax if it's not paid?

[Turbo Girl]

Hmmm, I'm not sure on the rent to own portion. I'm curious on how the lessee could insure equipment they technically don't own, unless the insurance company would allow you to add them on along with you, sort of like a lienholder?

Maybe Dogfan would know more since he's done it.

Parrot, are you sure you would even want to take that on considering if they run it into the ground and you have to step in and god knows what they could have done. Heck they could even take your equipment out in the dead of night, not pay bills like Eieleen said, or just about anything.

At least with an installment sale/owner finance agreement, everything is switched over and you don't have to babysit everything. If they fail/default it's not your name personally, it would be just the amount unpaid to you to seek civil remedy for.

Just a thought.

[parrot head]

These are all excellent points and well taken. This is now, at a very early stage, and the legal and liability issues could be a can of worms. If I could just sell the salon outright, things would be much easier. I'm back to the drawing boards, and thanks for all your insight and expert suggestions. After some thought (not much) Installment agreement with note is the way to go, so I changed my craigslist listing Thanks everyone.

[Turbo Girl]

To me it seems like a better avenue, to do business name and everything lock, stock & barrell.

You're still taking a risk for your term of owner financing, but honestly it's just about the only way to get top dollar for it since nobody will loan for them anymore.

A couple of other things to consider:
1. Term and interest, including late payment terms.
2. Do a substantial down payment, this weeds out alot of bad eggs.
3. Make potential buyers sign a non-disclosure agreement before opening any books. (Some even charge a fee before opening them).



I really feel for ya. I'm thinking it will be bitter sweet as you've been considering retirement for some time.

[parrot head]

Thanks Turbo. I value your advice, and look forward to reading your comments. The hardest thing of letting go is denial, but one way or another, we're getting out. Thank you, friend.