Legal Question in Business Law in California

Hi,

I won a Yoga Studio in an essay writing contest. The current owner for 13 years is moving out to continue with her PhD. We are transferring the studio with no money involved (expect the $108 dollar fee to participate in the contest). Starting January 1st I will be leasing the space, etc. I already filed for Fictitious Business Name (FBN) and kept the exact same name. Basically what I will get are the business name, clients, yoga equipment (mats, straps, etc).

While she says the business has been profitable, she has not shared "the books" with me, and says there is nothing to give since I am not purchasing the business.

My questions:

1. Changing the business name just a bit, would save me from any potential financial liabilities attached to her from before January 1st?

2. A simple document that states that she is transferring the studio free of debt and other liabilities (I don�t know what else) would protect me?

3. Anything else I should watch out for?

Best regards


Asked on 11/25/15, 9:17 am

1 Answer from Attorneys
William Christian Rodi Pollock

Please see a business attorney on this. I would suggest the formation of an LLC or similar liability protection entity. I doubt you are going to get any representations or warranties on a "free" business, but you have no idea what liabilities may already exist. You are walking right into them. Acquiring just the "assets" doesn't really help. The courts are likely to see this as acquiring the business goodwill and name, and the liabilities come with it.

Obtaining professional advice is most important. Also find out about her insurance, if any and the availability of tail coverage.

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Answered on 11/25/15, 11:00 am


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