What should I check before buying a hot tub and spa dealership?
Before buying a hot tub and spa dealership, read the brand dealer agreement and ask whether the manufacturer must approve you, check how showroom stock is financed, list the warranty and service duties owed to past buyers, assess the delivery and service crew, and read the showroom lease.
A hot tub dealership is built on a relationship with one or more manufacturers, a showroom full of financed units, and a long tail of customers who will call when something breaks. Those three things are among what you would be taking over. Check each of them before you go further, and have your lawyer look at anything that binds you to a brand.
The dealer agreement
Get a copy of every dealer agreement. Ask whether the manufacturer has to approve a new owner, whether the territory is exclusive, and whether there are stocking or display commitments. A dealer line matters in the sale, and it may not be the seller’s to hand over. Ask your lawyer how the agreement can be assigned, and speak to the manufacturer early.
Showroom stock and financing
Display units may be paid for through floor-plan or inventory financing, in which case a lender may hold a claim over them; ask your lawyer. Ask who the lender is, what is owed, and what the lender needs to see before a sale. See what to check about inventory financing alongside the supplier terms.
Warranty, service and people
Past buyers may be owed warranty work or service visits after the sale. Ask for a list of open jobs, and ask who covers the cost of work on units sold before closing. Meet the delivery and service crew, because the technicians often hold the customer relationships. Then read the showroom lease, including whether the landlord must consent to a transfer and how long it runs.
Related reading
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Legal
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Sources
This answer is checked against primary sources. Links were last confirmed on the dates shown.
- 01Business Development Bank of CanadaGovernmentHow to conduct due diligence when buying a business
- 02Business Development Bank of CanadaGovernmentInventory financing: What it is and how it works
- 03Business Development Bank of CanadaGovernment13 terms you need to understand before signing your commercial real estate lease
- 04Business Development Bank of CanadaGovernmentWhat are the steps to buying a business?
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