Let’s say you are considering the purchase of a holiday venue in France. Something we call a ‘gîte’ but the French authorities officially call a ‘meublé de tourisme’ (furnished tourist home) This wish inevitably brings up a couple of questions. Which is better? To buy a normal home, mansion or farm and do some building work to create a guesthouse or holiday rental home exactly as you imagine it? Or should you buy an existing gîte business already used for holiday rental? Sometimes, the question does not even arise, simply because you fall in love with a building and the spot it is sitting in. You could not care less whether it is already a business: you want to live there! But when you are still searching it is something you might want to consider. If only to help you choose a certain research strategy and narrow the field. Whichever you choose, you need not be afraid of the legal implications or other risks buying a business in France. The French law does a very good job protecting the buyer.
Buying an existing tourist business
I you are certain that you’ll be using the intended purchase as a tourist business, it might be clever to consider buying an existing business. The advantages being that the previous owner will have done a lot of the groundwork for you. The gîtes will already have a reputation, there’s a commercial website, it will be featured on most important holiday rental sites and of course you can benefit from the existing client base. Furthermore, in most cases the business will be sold fully furnished, so you can start earning money right away. You will need less reserve buffer.
The buying process of a French business
If you buy, the French law actually considers that you are buying two separate items: the ‘murs’, being the actual building and the grounds. And the ‘fonds de commerce’: the business. For the ‘murs’ there is no surprises. This is just like buying any other property in France, with the same ‘caveat emptor’. For the purchase of the business (session de fonds de commerce) however, the rules are aplenty and very strict. The seller will have to give full disclosure at the notaries, including a complete description of the activities and revenues, so the contract can contain all the information that might be important for your future success. Because finally, you are buying something very insubstantial: earning potential!
What does the seller have to disclose?
The law demands a certified accountants report over the last three years of the business. This report gives you full insight in the success of the company. Was there a profit? What was the occupancy rate? The average price earned per week? What are the running costs? And even: is there a probability the owner has received income that he has omitted to declare and can you expect a little more than the papers show? As you see, if you want to buy a business in France the law is a 100% behind you.
Goal oriented search for ‘tourist business France’
In any case, before you need to worry about the buying process, you’d have to find the right property first! If you go on a site like Immogo, you can search with key words like ‘holiday home’, ‘gîte’ or ‘tourist business‘ and come up with an attractive list of possible venues. Or use certain hobbies. For instance, there are several properties with (carp) fishing or equestrian possibilities, or equestrian. The advantage of an international site showing private sellers offers is you don’t have to pay the property agents fees. And of course there are many English and Dutch (English speaking) owners, which makes the whole process so much easier.
Ask advise from the professionals
If you are starting the buying process and have questions about the legal system and the process, don’t hesitate to ask a professional. Like the Dutch company ‘Compromis-de-vente.info’ who has helped many Dutch and English clients buy or start a business in France and who can help you check the preliminary deed (compromis de vente) to make certain there are no untoward clauses or mistakes.
Originally published here.