Is it normal for a broker to ask for exclusivity upfront?

Asking a seller to sign an exclusive listing is a familiar request, and Treadstone Law, an Ontario law firm, describes exclusive listings as the more common arrangement for business sales. Familiar is not the same as required. Exclusivity is a term in a contract, and you decide whether to accept it, shorten it or ask for something narrower. The points below help you read what a particular broker is asking for.

What exclusive actually gives the broker

Treadstone Law describes an exclusive listing as one that gives a single broker the sole right to market and sell your business for a defined term. It adds that, under most exclusive agreements, the broker is entitled to the commission if the business sells during that term, whether or not the buyer came through the broker’s efforts, unless the agreement carves out specific named prospects you identified beforehand. If you already have a manager, competitor or supplier in mind, that carve-out list matters before you sign.

What an Ontario broker’s fee has to look like

In Ontario, the Trust in Real Estate Services Act, 2002 defines real estate to include businesses. It says remuneration payable to a brokerage for a trade in real estate must be an agreed amount or percentage of the sale price, or a combination of both. Section 33(3) adds that, unless you agree in writing, a brokerage cannot claim remuneration from you if it knows the business is covered by an unexpired listing agreement with another brokerage. Other provinces run their own regimes, so confirm which rules apply where you are.

What to ask before agreeing

BDC describes business brokers and investment bankers as intermediaries with access to a broad network of qualified buyers whom they can discreetly approach on your behalf. Exclusivity should be tied to that service, so ask the broker to put it in writing:

• What marketing and buyer outreach the broker commits to, and how often it will report to you.
• How long the exclusive period runs, and what happens at the end of it.
• Which buyers you are excluding from commission, listed by name in the agreement.
• What triggers the commission, and what the amount or percentage is applied to.
• Whether you can end the agreement if the broker stops doing what it promised.