Buying a taxi fleet in Canada

Someone evaluating a taxi fleet is buying two things that look like one: a group of cars, and the permission to run them as taxis. The cars can be inspected on a lot. The permission depends on a regulator, and on whether you meet its conditions. This guide is written for the buyer. It covers what you must qualify for personally, what a good fleet looks like on paper, what a seller may not mention, and the questions that separate a fleet worth owning from one that only looks busy. Rules change between provinces and cities, so each example below is tied to a place.

What you must qualify for yourself

In British Columbia the Passenger Transportation Board says that under the Act it may approve a transfer if it considers the applicant a fit and proper person and capable of providing a service, and its transfer page lists financial information the buyer provides, including a balance sheet, or a personal net worth statement for a sole proprietor or partnership. In Québec the Act respecting remunerated passenger transportation by automobile sets conditions for authorizing an owner’s car and for authorizing a transportation system, and one of them looks at whether an authorization the applicant held is suspended when the application is filed, or was cancelled in the five years before, other than at the applicant’s request. Ask the regulator what it will look at in your case before you sign.

What the licence terms carry over

The British Columbia Board states that all terms and conditions attached to a licence are transferred, that a single term cannot be transferred alone, and that the new licence carries the same terms as the old one. A buyer who plans to use the fleet differently, for example in another area or with other vehicles, has to read those terms before pricing the deal. Ask the seller for the licence and every amendment. If the terms do not fit your plan, ask the Board whether a separate application is needed.

What a good fleet looks like on paper

Ask whether the fleet can show, car by car, what each one earns and when it last worked. Look for clear records of who drives which car and on what basis, because the Canada Revenue Agency distinguishes an employee, who generally works under the direction and control of whoever hired them, from a self-employed worker under a contract for services. Look for contracts that name the fleet and say what happens on a change of owner. Look for dispatch records you can verify. A fleet that cannot produce these has numbers you cannot test. Ask also how the dispatch records tie to the cash actually received, so that trips, fares and deposits agree, and whether the cars shown on the schedule are the cars on the road.

What a seller may not volunteer

Ask what the seller has not volunteered. Ask which cars sit idle and why. Ask whether any regulator has contacted the fleet about fares, meters or records. In British Columbia the Board has posted that analogue taxi meters are no longer permitted, so ask which cars carry which equipment. Ask whether a key driver, dispatcher or account manager is likely to stay after the owner leaves, which is a key-person risk. Ask which agreements need the other party’s consent to move. If any answer is vague, ask for it in writing.

Who runs dispatch

In Québec the Act describes a transportation system as several drivers and several automobiles under the responsibility of a legal person who agrees to be its operator, and who either performs the dispatcher and register-keeping functions or sees that suppliers perform them. A buyer should know who holds those functions in the fleet being sold, whether the dispatch software or service is owned by the fleet or supplied by someone else, and whether that supplier’s agreement continues after closing. Where the dispatch brand is the thing customers recognise, find out who owns it.

Build the approval into your offer

Ask the regulator for its process and the documents it requires from a buyer. Make your offer conditional on the regulator’s approval of the transfer or authorization, and on your financing. In British Columbia the Board states that both the transferor and the transferee must apply, so you cannot leave the application to the seller alone. Ask your lawyer what happens to your deposit if the regulator refuses. Where the deal is a share purchase, ask the regulator whether notice is required: in British Columbia the Board says it does not need to approve share transfers, but if it becomes aware of a major transfer of shares, new majority shareholders or directors may need to complete a disclosure form or supply further information.

• Confirm with the regulator that you can hold the licences or authorizations, and what it will assess.
• Obtain the licence and every amendment, and read its terms against your plan.
• Ask for car-by-car earnings, idle time and equipment details.
• Confirm how each driver is engaged, and how that was decided.
• List every contract and agreement that needs consent to continue.