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French Property News Q&A - Buying Business Premises

Question

We bought a property in France last year and have been living here full-time since then. We had always considered setting up a business here once we were settled, and the opportunity has now arisen as our local café/bar has recently been advertised for sale. As both my partner and I have catering backgrounds this seems like the perfect venture, and we're very keen to buy the business. Is the process of buying business premises different from a house purchase? Are there any particular legalities that we should be aware of?

Answer

The first point to establish is whether the café / bar premises are being sold outright or on a lease. Commercial premises will often be subject to a lease. If so, you must ensure you obtain professional advice so that you fully understand the terms and conditions plus the rights and obligations which the lease embodies.

Second - it is essential to seek out and instruct a good English speaking accountant who can inspect the accounts of the business currently operating and advise you as to what level of turnover will be required to ensure a decent profit margin and help you draw up a business plan.

If the property is for sale outright (rather than being subject to a lease) then you will be paying for the bricks and mortar and for the “goodwill” (the fonds de commerce). If you are taking over the business as a going concern it will be important to arrange the transfer into your names of all necessary licences authorising the preparation and sale of food and the selling of alcohol as well as a music licence perhaps. If the previous business closed or failed, it is likely you will need to start from scratch in applying for new licences.

France is a highly bureaucratic and rule bound country and given that the premises will be open to the public there are a host of rules and regulations which will need to be adhered to and observed religiously. These include issues relating to planning, signage, disabled access, fire regulations, health and safety regulations, food production regulation and employment regulations for any staff you employ etc etc. In addition you will need to negotiate the hurdles of understanding the French tax system and getting over the shock of the social charges!

The local Chambre de Commerce is a good place to start to gather information about running a small business in the locality. Do your research and don't skimp on taking professional advice - invariably it will be a false economy.

Finally, a few words of caution. It is generally very hard to make a good living out of a café / bar in France and the locals will not always transfer their patronage to new non-French owners. Taking out a commercial loan secured against your French house to support refurbishment or fitting out of the café/bar should be avoided at all costs.

If after taking on board all of the above you are still keen to proceed, I wish you bon courage & bonne chance!

This Q&A first appeared in Issue 258 of French Property news - August 2012.

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