Can I keep using my recipes after I sell my restaurant?
Whether you can keep using your recipes depends on what the sale agreement says. Decide before listing which recipes and names go with the restaurant and which you keep, tell buyers early, and expect a request that you not compete. Your lawyer should word it.
Some owners sell the restaurant but plan to keep cooking: catering, a food truck, a jar of the house sauce at a market. Nothing about the sale makes that automatic. Whether the recipes go to the buyer is a point you settle in the agreement, and a buyer who finds out late may push back. Decide early and say it plainly.
Decide what is sold and what you keep
Make a list before you talk to buyers. Which recipes are part of the restaurant? Which dishes are tied to its name? Do you want to keep one signature item, a sauce or a family recipe? Also include the restaurant’s name, menu design and social accounts, since a buyer may assume they come with the business. A written list also gives your lawyer something specific to put in the agreement.
Say it up front
Raise it when you first discuss terms, not after an offer. A buyer who is paying for a restaurant’s reputation will care about the food that built it. If you intend to keep a recipe, a buyer may accept that or may price the deal around it. Telling them early lets them decide with full information and keeps trust intact.
Expect a request not to compete
A buyer may ask the seller to agree not to open a similar business nearby or for a stated time. A catering company or truck selling the same menu may fall inside that. Whether such a promise is enforceable and how far it can reach is a question for your lawyer, not something to guess. Ask for the wording to cover exactly what you plan to do.
Have your lawyer write it down
- List the recipes and names the buyer receives.
- List the ones you keep, and what you may do with them.
- State whether you will help train the buyer’s cooks.
- Describe any limits on competing, in plain terms.
The buyer’s side of this question is covered in do recipes come with a restaurant when you buy it.
Related reading
15 pages on the same subject, grouped by topic.
Buying
Selling
- GuideSelling a restaurant in Canada
- Expert answerHow do I sell an independent pizzeria?
- GuideHow do I sell my cafe?
- Expert answerHow do I sell my restaurant if I am also the head chef?
- Expert answerHow do I sell an Indian restaurant?
- Expert answerHow do I sell a Chinese restaurant?
- Expert answerHow do I sell a Korean restaurant?
- Expert answerHow do I sell a Thai restaurant?
Due diligence
Sources
This answer is checked against primary sources. Links were last confirmed on the dates shown.
- 01Business Development Bank of CanadaGovernmentHow to minimize negotiations when selling your business
- 02Business Development Bank of CanadaGovernmentMajor pitfalls to avoid when negotiating a purchase agreement
- 03Canada Revenue AgencyGovernmentRestrictive covenant
- 04Restaurants CanadaIndustryRestaurants Canada - The Voice of Foodservice
Deavo is an advertising and listings platform, not a brokerage, law firm or valuation firm. This page is general information, not legal, tax, accounting or valuation advice, and rules differ by province. Confirm anything you rely on with a qualified professional before you act on it.