Establishing whether the business you’re interested in is worth the asking price is often the best way to begin. It’s also a good idea to keep your options open by comparing several schemes, before deciding on one.
- Have the business or businesses properly evaluated by an expert.
- Accounting records and building reports will indicate the state of the business and the physical structures.
- Talk to a management rights specialist about the current state of the local market and apparent trends.
The facts about Management Rights
Before you do anything, you should have the management rights business you're thinking of buying properly evaluated. Accounting records and building reports will indicate the state of the business and the physical structures. You’re entitled to see these records and reports and, as a potential purchaser, have them independently reviewed by an expert of your choice.
First, establish how long the current management rights agreement has to run, and whether there are options to renew.
If you’re new to the location where you intend to buy, or new to the management rights industry itself, it’s a good idea to evaluate the potential of several schemes before deciding on one.
Although there are ‘standard’ formats for agreements between bodies corporate and management rights purchasers, there can be many variables.
In this introduction to management rights, we address issues and considerations that are common to most agreements. But don’t assume that these will all automatically apply to your agreement, or that they’re exclusive. Make sure you have all the terms and conditions in writing, and have the documentation reviewed by an accountant, lawyer and any other relevant professional with management rights expertise.
A specialist broker selling management rights should also be able to provide you with background information on the current state of the local market and apparent trends.