3 Key Legal Points When Buying A Pharmacy

John Kafrouni

17 Feb 2012

•

min read

Pharmacy sales have many similar issues to other retail businesses. However, there are some very significant issues that require a buyer’s particular attention prior to entering into a contract, so that the buyer can legally run the business after settlement.

Regulation & Pharmaceutical Benefits Scheme

There are strict requirements under Queensland law as to who can and cannot own a pharmacy business. In order to purchase a pharmacy in Queensland, the buyer, whether a company or individual, must meet the strict legal requirements set out in the Pharmacy Business Ownership Act 2001. Failure to meet the requirements of these laws before commencing business could incur fines of up to $20,000.00 and could potentially mean you own a business that cannot legally operate. Therefore, before signing a contract for the purchase of a pharmacy, consideration should be given to the process and time frame for making all applications for the necessary approvals, licenses and permits required to own and operate the business. Only once approval has been obtained from the appropriate state authority will Medicare Australia consider an application for the necessary approval for the business under the pharmaceutical benefits scheme.

It is therefore imperative that a contract for the purchase of a pharmacy is made conditional upon the buyer obtaining the necessary state and federal approvals by way of carefully worded special conditions.

Trading Stock & Suppliers

The continued supply of stock such as prescription medicines, health supplements, first aid products and often beauty and infant supplies are important to the continued undisrupted trading of the business following settlement. It will be important to ascertain whether existing supply agreements and their inclusion, such as display and shop fittings, can be transferred or if new agreements will need to be negotiated and put into place from settlement. In order to accommodate this investigative and negotiation period it is important to make the settlement of the contract subject to obtaining satisfactory due diligence and also the satisfactory transfer or negotiation of new supply contracts. The only way to accomplish this is by the insertion of precise special conditions.

Account Customers

Most pharmacies will have customers who purchase goods from the pharmacy by way of a monthly account. Special attention should be paid to the amount of these accounts, their record of payment and any discounts that the current owner has agreed to provide to each account customer. It is advisable to make the settlement of the contract subject to a special condition to obtain a satisfactory inspection of the business’ financial accounts, in order to give a buyer and its financial advisors time to ascertain whether aside from the rest of the financial records, they are satisfied with the customer account arrangements..

Conclusion

In order to protect their business, a buyer of a pharmacy should always seek the advice of a specialist business lawyer prior to signing a contract. Without this assistance and the inclusion of all necessary special conditions in the contract, a buyer could become the owner of a business without the necessary stock and trade, or worse a business they cannot legally operate.

Joe Kafrouni, Legal Practitioner Director, Kafrouni Lawyers

Disclaimer

The information provided by Kafrouni Lawyers is intended to provide general information and is not legal advice or a substitute for it. You should always consult their own legal advisors to discuss their particular circumstances. Kafrouni Lawyers makes no warranties or representations regarding the information and exclude any liability which may arise as a result of the use of this information. This information is the copyright of Kafrouni Lawyers.

Liability limited by a scheme approved under professional standards legislation.

What People Say

Joe Kafrouni helped me in my acrimonious shareholders dispute, resulting in Supreme Court litigation. During my case, which took years to resolve, I appreciated Joe’s great concern for my well being and that of my family. I felt he was attentive, direct and provided me with sound advice. In the end, Joe skilfully negotiated a settlement that exceeded my expectations and I am grateful.

Thank you, Joe. It was a pleasure working with you to resolve the matter today. In particular, I appreciated your patience to fully understand each party’s position and to bed down a final heads of agreement to conclude the resolution between the parties.

Joe Kafrouni has been our company’s lawyer from the beginning and has been instrumental in our journey as company owners and directors. When dealing with both complex and sensitive company issues, Joe is able to provide us with clearly articulated strategies that are well thought‐out and with the bigger picture in mind. He genuinely cares and is always willing to share his personal views, which are both honest and just. Joe is highly professional and knowledgeable in his field. You will definitely benefit having him on your team.

Joe, I appreciate it was a very long day yesterday but we got there in the end. I thought you did a great job and I enjoyed watching your approach and the way you conducted the mediation.

Joe, as you know we were in a very difficult position with our company before we engaged you as our lawyer and fortunately, even with the odds stacked heavily against us in our shareholders dispute, you managed to pull us through to victory. You are a true credit to the industry not only because of your skilled negotiating tactics but also due to your personable nature, which made us feel comfortable in such a volatile situation.

The biggest lesson I have learnt from you recently, Joe, is that it pays to have a professional such as yourself on my side to deal with matters that I am unequipped to handle … so I can carry on with the task at hand of building my business! Thanks again, I’ll take pleasure in recommending your services to anyone in need.

A big thank you for your time today, Joe. Thankfully we managed to strike a deal although it took a little while to do. Thanks for your patience and perseverance.

Contact

Let’s talk.

‍

I take on a limited number of matters so I can give each my full attention with the time I have.

‍

To keep things simple and fair, I offer an initial paid consultation that you can book here. It’s a chance for us to speak directly about your needs — no obligations, no pressure.

‍

If you're ready to move forward, you can choose a time that suits you and pay the initial consultation fee securely when you book.

‍

This approach helps me focus on clients who are serious about getting the right advice and ensures I can give you the time and care the matter deserves.

‍

I allow up to 1.5 hours for the consultation. Afterward, you’ll receive a short summary of what we discussed and any recommended next steps.

‍

This approach helps me work closely with clients who are serious about getting the right advice — and ensures I can give them the attention they’re paying for.

Table of contents

What People Say

Contact