Do I have to accept Gift Certificates that were purchased from the previous owner of the small biz I recently bought? It's killing me financially.
Question Details: I bought a small service biz in August 2009. The biz opened in 2004. It was sold in 2007. And then sold to me in 2009. Do I have to honor all of the gift cetificates? If so, from both previous owners or just the one I purchased the biz from? Is there a loophole for me because I didn't receive any of the money from those GC purchases, the previous owners did. It's really hurting me financially to redeem them. What can I do?
Business Law Answers
If the prior owner did not provide you with good information about the number of these gift certificates and properly adjust the selling price of the business accordingly, then you may have a good case against the seller.
It may be possible for you to refuse to honor those certificates, but you need to discuss all of the facts of the situation. Normally such certificates must be honored, but there are exceptions.
This is complicated and I can only advise you fully after discussing all of the facts.
Contact my office for a consultation on these issues.
Robert J. Spitz
909 395 0909
You need to take the gift certificates (one of each different type, if the different owners used different ones), and whatever contract or other papers you had for the purchase of the business, to a local attorney. One of the biggest questions I'd want to ask would be how much you knew about these gift certificates before you closed the deal.
Buying a business is serious business. Outstanding debts (which is what those GC's are, to the business or the previous owner) that aren't disclosed are just one of the dangers that an experienced attorney can really help protect you from.
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