When buying a business, across any industry, you will come across these terms “Leasehold” and “Freehold Going Concern”. This article looks at what are the differences between a Leasehold and a Freehold Going Concern, when you are buying a business.
Leasehold
A leasehold is also termed as “buying the business”, without the land and buildings, for which you have a lease from a landlord to occupy those land and buildings.
With a leasehold you are buying:
– A lease which gives you the right to occupy land and the use of the buildings on that land
– The plant and equipment, fixtures and fittings that are required to operate the business
– The goodwill of the business
When you are looking at buying a leasehold, you are buying the business, with plant and equipment, fixtures and fittings and goodwill to operate the business and taking over a lease with the right to occupy and operate that business on land. Typically, the most important part of buying a business is the lease. If the business is location specific and you have a short tenure on the lease, then this increases the uncertainty of the tenure of your business an you will need to work with the landlord on a lease extension.
Freehold Going Concern
A Freehold Going Concern is the freehold property (including buildings) and the business operating on that property. The same party would own the land and buildings and also operate the business.
With a Freehold Going Concern, you are buying:
– The freehold land and buildings
– The business – which as mentioned above would include plant and equipment, fixtures and fittings and goodwill (which usually includes phone numbers, customer lists, IP, etc)
This type of purchase, that is as a freehold going concern, should mean that the business is specific to its location and by buying the freehold, you are securing its tenure and future.
Business Accountants and Business Advisors: Rogerson Kenny Business Accountants can assist you with the process of buying a business or a freehold going concern. Even at the “idea” or concept stage, we have experience to talk through practical aspects of the purchase, before even looking at the figures.
