Do supplier rebates and loyalty programs transfer when I buy a retail store?

Do not assume a rebate or a loyalty program comes with the store. If a supplier rebate comes from an agreement between the seller and the supplier, that agreement is where to start. A loyalty program has two parts: the terms the members signed up under, and the personal information the store holds about them. Each has its own route, and both are worth settling before closing rather than after the first month’s numbers arrive.

Supplier rebates

BDC’s guide to selling a business lists reviewing contracts, leases and business agreements, and updating them if needed, among the steps before a sale. A buyer should do the same reading. Ask for the supplier agreements and find the rebate terms. What purchases count toward it, and whose? Is a rebate earned before closing paid to the seller or to you? Can the agreement be assigned, and does it end when ownership changes? Then ask the supplier, in writing, whether it will keep the same terms for the new owner. See assignment clause.

Loyalty program member data

Under PIPEDA s.7.2(1), parties to a prospective transaction may use and disclose personal information without the individual’s knowledge or consent if they have an agreement requiring the recipient to use and disclose it solely for purposes related to the transaction, to protect it with appropriate safeguards and, if the deal does not proceed, to return or destroy it within a reasonable time, and the information is necessary. If the transaction is completed, s.7.2(2) lets the parties use and disclose information disclosed that way without knowledge or consent if three conditions are met. They have an agreement requiring each to use and disclose it solely for the purposes for which it was collected, permitted to be used or disclosed before completion, to protect it and to give effect to any withdrawal of consent. The information is necessary for carrying on the business that was the object of the transaction. And one of the parties notifies the individual, within a reasonable time after completion, that the transaction has been completed and their information was disclosed. Under s.7.2(4), neither route applies to a transaction whose primary purpose or result is the purchase, sale or other acquisition or disposition, or lease, of personal information.

If the store is in Quebec

Quebec’s private-sector privacy Act, s.18.4, requires an agreement to be entered into first. After the transaction is concluded, if the other party wishes to continue using or communicating the information, it may do so only in accordance with that Act, and it must notify the person concerned within a reasonable time that it now holds the information because of the transaction. For the wider question, see can a seller hand over customer contact lists at closing.

Points and balances members hold

Ask for the program’s terms and the outstanding points or credits. Whether you will honour them, and how any cost is reflected in the purchase price, is something to settle in the agreement before closing.