How are core charges handled when buying an auto parts store?

A core is a used part, such as a battery, alternator or starter, that goes back so it can be rebuilt. Ask whether customers pay a deposit and get it back when they return the old part. Suppliers then credit the store when the core is returned to them. That cycle creates money and stock that do not show up in an ordinary inventory count.

Returned cores on the shelf

Cores waiting to go back to suppliers are stock of a kind. Some are worth a credit and some are not, depending on the supplier’s terms and the condition of the part. Ask the seller to count them separately, by type, and to show which supplier each one goes back to. Your accountant can help you decide how they belong in the closing numbers.

Deposits owed each way

The store may owe deposits back to customers who have not yet returned a part. It may also be owed money by suppliers for cores already sent back. Ask for a list of both. These amounts can look small one by one but add up, and a buyer who does not ask can inherit these liabilities at closing.

Pending credits and the agreement

Ask for each supplier’s statement and note any credits not yet issued. Then ask your lawyer to make the purchase agreement clear about three things:

• Who keeps the credits for cores sent back before closing.
• Who pays the deposits owed to customers after closing.
• How cores are counted on closing day, and by whom.

For the wider picture of buying a parts store, this page on banner stores and franchises is a useful next read, and supplier terms matter there too.