Buying a pet supply store in Canada

Evaluating a pet supply store comes down to whether the customers will stay once the person they know has left the counter. The books show what was sold; they do not show who will keep coming. Signs of a good purchase can look dull: food and litter bought on a cycle, a spread of suppliers, a team that has been there a while, and licences that match what the store actually does. A weaker one may look livelier on the surface, with sales spikes from promotions, a floor weighted toward hard goods, and a single groomer or a single premium brand carrying the margin. This guide is about telling the two apart, and about the qualification steps that are yours to meet, not the seller’s.

What a good one looks like beside a weak one

Look first at what customers buy and how often. A store whose sales are mostly consumables that people replace on a cycle may have an earnings pattern that is easier to reason about; ask how much of the rest depends on promotions and on finding new customers. Then look at where the margin comes from. If one premium line, one supplier account or one groomer produces a large share of profit, you are buying that dependency along with the store, and the supplier or the person is not a party to your purchase. Finally look at the staff: how long they have worked there, who customers ask for by name, and who would be hard to replace.

What a seller may not volunteer

Ask for what is awkward. How often has food been written off as expired, and what was done about it? Which suppliers pay rebates, on what terms and over what cycle? Has the store faced complaints or injuries from grooming, training or daycare, and what did the insurer say? Does it sell any live animals, and if so which licences, permits and inspection records sit behind that line? How do its fastest-selling products compare in price with online sellers and larger retailers? And what sits in the loyalty program, such as unredeemed points or prepaid balances, that you would be taking on? Answers given reluctantly are information too.

The qualifications that are yours to meet

Some things cannot be inherited, and you should confirm them before the price is final. Municipal licences do not necessarily move with the shop: Abbotsford states that its business licences are non-transferable and that a new owner applies afresh, while Brampton licenses pet shops, pet grooming and kennels or doggie daycare as separate categories. Ask the municipality which categories your intended activities fall under. If the store trades under a banner on a franchise agreement, check whether that agreement requires the franchisor’s approval of you as the new operator. Ontario, Alberta and British Columbia each have franchise legislation that requires a disclosure document for prospective franchisees, and our answer on franchise resales explains when a resale is exempt.

Supplier access is something you apply for

Ask whether premium and specialty food lines are part of why customers choose the store, and do not assume the supplier will supply the new owner. Ask the seller to describe each key account in writing, including territory limits, minimum orders and exclusivity, and ask to speak with the supplier’s representative once a confidentiality agreement is in place. Also ask which accounts are held personally by the owner rather than by the business, because those may not pass with the business at all. A store that loses the line that built its following has lost part of what you paid for.

Staff come with the store

If you buy the business and keep the team, the law may treat their service as unbroken. The Ontario Employment Standards Act guide says that where the purchaser hires the seller’s employee, the person’s length of employment with the seller flows through to the purchaser (subject to the time limit and other terms in s.9 of the Act), and British Columbia’s interpretive guide says the employment of the business’s employees is deemed, for the purposes of that Act, continuous and uninterrupted by the disposition. Plan your questions accordingly: tenure, pay, accrued vacation and any commission arrangements for groomers or trainers. Then ask a harder one: whose clients are they? A groomer with a following can open down the road, so find out what the seller has in writing about restrictions after someone leaves.

A short walk through the store

An hour on the shop floor tells you things the financial statements cannot, and it costs nothing. Go on a busy day and take a list; once an offer is accepted, the guide to pet supply store due diligence covers the formal checks.

• Read the dates on the shelves: how much stock is close to its date, and where is it kept?
• Watch the regulars: who do they greet, and who do they ask for by name?
• Ask to see the grooming or daycare booking system and how far ahead it is filled.
• Compare the licences on the wall with the activities you can see being carried on.
• Note how any animal areas are kept apart from food storage and customer aisles.