How do I review a tire shop’s relationships with its wholesale tire distributors?

Start with the list. Ask which distributors supply most of the shop’s tires, which cover rarer sizes, and which are used only in a pinch. If nearly everything comes from one supplier, find out why and what the alternatives are. A thin supply picture is a risk if that one account changes.

Then look at the terms. Ask for the pricing arrangements, credit limits, payment timing, rebates or volume agreements, and how returns and warranty claims are handled. Some of these may be tied to the current owner or to the shop’s history, and may not transfer. Your lawyer can read any written supply terms and tell you what they mean for a new owner.

Next, check the service. How quickly do orders arrive? What happens when a size is out of stock in the busy season? Does the shop have a regular sales representative? Ask staff how well the suppliers perform when a customer is waiting. Finally, ask if you may introduce yourself to the main distributors before closing. Their response shows whether the account is stable, and whether the shop has a good name with the people who supply it. Your accountant can help you see how payables and supplier credit appear in the books.

Key takeaways

• List all distributors and note which supply most of the stock.
• Review pricing, credit, return and rebate terms and whether they transfer.
• Speak with the main ones, with permission, before closing.