Selling a pet supply store in Canada

An owner who has decided to sell a pet supply store has a different task from one still asking what the store is worth. The work now is sequencing. A pet store sale involves several parties beyond the buyer and seller: the municipality may hold the licence, a supplier the premium brand account, the landlord the lease, and customers their own information. Several of those may not be the seller’s alone to hand over, so the order in which you approach each of them, and what you say, shapes both the timetable and the price. The companion guide on what a pet supply store is worth covers the pricing side.

Start with the licences, because they may not move

Municipal licensing can stall a pet store sale, and municipalities set their own categories. Toronto’s business-regulations guide lists a pet shop with a municipal operating licence but lists a pet food business without one, and gives animal grooming and daycare a category of their own. Brampton licenses pet shops, pet grooming and kennels or doggie daycare separately, and Mississauga lists pet shops and breeding and boarding kennels among its licensed businesses. Abbotsford, in British Columbia, states that its business licences are non-transferable and that a change of ownership requires a new application. Municipal rules vary, so confirm yours, but plan on the buyer applying in their own name. Make a one-page list of every activity the store carries on, the licence covering each and who holds it, and check it with the municipality before a buyer asks.

Open the supplier conversations early, and carefully

Ask whether premium and specialty food lines are part of why customers choose the store; if so, a new owner may have to win those supply arrangements again. A buyer may want to know whether the same terms will be offered to them, which can mean a supplier’s representative learns a sale is coming. That is a confidentiality risk: BDC warns that, depending on a listing site’s confidentiality procedures, word of a sale can reach employees, customers or suppliers. Decide with your advisers when a buyer may contact each key supplier, and make it conditional on a signed confidentiality agreement. If a supplier would decline the buyer, you want to learn that before the price is agreed, not after.

Customer data: what you can share, and when

A pet store’s customer list, including loyalty and auto-ship records, may be valuable to a buyer, but it is personal information and that limits how freely it can be shared. Federal privacy law addresses the situation directly. Under section 7.2 of the Personal Information Protection and Electronic Documents Act, parties to a prospective business transaction may use and disclose personal information without the individual’s knowledge or consent if they have an agreement requiring the recipient to use and disclose it solely for purposes related to the transaction, protect it with security safeguards appropriate to its sensitivity and return or destroy it within a reasonable time if the deal does not proceed, and the information is necessary to decide whether to proceed and, if the parties do, to complete the deal. After closing, further conditions apply, including that one of the parties notify the individuals within a reasonable time. The provision does not apply to a deal whose primary purpose or result is the purchase, sale or other acquisition or disposition, or lease, of personal information. Ask a privacy lawyer which law governs your store’s data.

Clean up the stock before the count

Stock can reopen a price after the offer, and in a pet store the problem is dates. Food and treats expire, specialty diets can sit unsold, and a buyer counting on closing day may take out anything expired or close to its date. In the months before listing, stop reordering slow lines, sell near-dated stock through at ordinary prices where you can, and keep a record of write-offs so you can explain them. Separate stock you own from anything held on consignment or on terms that leave it the supplier’s, since that is not yours to sell. The CRA notes a sales agreement may state a separate value for inventory, so agree in advance how the closing count will set that figure.

Prepare your people and your documents

A buyer is acquiring a team as well as a shop, and groomers, trainers and long-serving floor staff are the people who can take clients with them. Plan who is told, in what order and by whom, and what stays confidential until a deal is firm. A buyer may also ask to see a short list of documents early, and having them ready helps.

• Current copies of every municipal licence, with the activity each covers and any inspection history.
• Supplier account terms for your top lines, including rebates, minimum orders and any exclusivity.
• Monthly sales split between consumables, hard goods and services, taken from the till system.
• The lease, any amendments, and a note of what the landlord requires for consent to an assignment.
• Loyalty and auto-ship program terms, and how customers agreed to the store holding their information.

What can delay a closing

Four things can push a pet store closing back. The buyer’s licence applications can take longer than the purchase agreement assumed. The landlord can be slow to consent to an assignment of the lease, a subject covered in our guide to retail leases and inventory transfers. A key supplier can hesitate over the new account. And the closing-day stock count can land far from the seller’s own figure, for example because of dates. If the store sells live animals, add a fifth: that line may need its own paper trail of permits and inspection records, and a buyer’s lawyer may want it carved out until the position is clear. Build the conditions list around these, and give the licence applications the longest lead.