A retail business buyer checklist covers how inventory is counted and valued, the lease term and any co-tenancy or percentage-rent clauses, the shrinkage and loss history, supplier and vendor agreements, gift-card and loyalty-program liability, and how much of the business depends on a physical location versus online channels — the items specific to a business built around merchandise and a storefront.
Reviewed
This checklist covers what to verify before buying a Canadian retail business — a storefront selling physical merchandise, whether independent or part of a small chain. Retail carries risk concentrated in inventory, lease terms and the location itself in ways a service business does not, so these items deserve early, dedicated attention rather than a quick walk-through of the shop floor.
Verify how inventory is counted and valued
Agree in writing how inventory will be counted and valued at closing, and confirm who performs the countA verbal understanding about how inventory gets valued is one of the most common sources of a dispute in the final days before closing, and it is far easier to fix in the purchase agreement than at the register.
Ask for aged inventory reports and confirm how much stock is slow-moving, discontinued or otherwise unlikely to sell at full valueA red flag is an inventory figure that includes a meaningful amount of stock that has not turned over in a long time, since it is worth far less than its book value implies.
Review the shrinkage and loss-prevention history, including any recent theft, employee dishonesty or vendor discrepancy incidentsRecurring, unexplained shrinkage points to a control weakness that a new owner inherits along with the inventory, not a problem that resolves itself with a change of ownership.
Review the lease and the location
Confirm the remaining lease term, renewal options, and whether the landlord will consent to assignmentA retail location with a short remaining term and no renewal right can be worth considerably less than the business appears to be, since foot traffic and location are often most of what is being bought.
Check for co-tenancy, exclusivity or radius-restriction clauses tied to an anchor tenant or nearby competitorsA co-tenancy clause tied to an anchor store leaving the plaza can trigger a rent reduction right or a right to terminate that materially changes what the lease is actually worth.
Get a full breakdown of base rent, percentage rent and common area charges, not just the headline rent figureRetail leases frequently include percentage rent above a sales threshold, and a buyer comparing offers needs the full occupancy cost, not the number that looks best on a summary sheet.
Check supplier terms and sales-tax compliance
Request copies of key supplier and vendor agreements and confirm which are exclusive, personally guaranteed or non-transferableA favourable wholesale pricing arrangement tied personally to the current owner’s relationship with a supplier does not automatically carry over to a new owner on the same terms.
Confirm sales-tax filings are current and reconcile reported sales against POS and bank recordsAn unresolved GST/HST or provincial sales-tax filing gap can become the buyer’s problem after closing if the deal is structured as a share purchase.
Ask whether the business imports goods directly and, if so, review customs compliance and any duties or classification issues on fileA retailer that imports its own merchandise carries customs and tariff-classification exposure that a purely domestic-supplied business does not, and it is worth confirming there is no open dispute with border authorities.
Check outstanding customer liabilities and online channels
Get the outstanding balance on gift cards and loyalty-program points and confirm how that liability transfers at closingUnredeemed gift cards are a real liability the business already owes its customers, and a buyer needs that number, not an estimate, before agreeing on price.
Review return, exchange and chargeback rates over several periods, not just the most recent oneA rising return or chargeback rate can signal a quality or fulfillment problem that will keep costing money after the sale unless it is addressed.
Confirm ownership and login control of any online store, marketplace listings and social media accounts tied to the retail brandAn online sales channel registered to the seller personally, rather than to the business, can leave a new owner locked out of an established customer base built over years.
Deavo is an advertising and listings platform, not a brokerage, law firm or valuation firm. This page is general information, not legal, tax, accounting or valuation advice, and rules differ by province. Confirm anything you rely on with a qualified professional before you act on it.