A business is legally defined as a collection of tangible and intangible movable assets allocated to the operation of a commercial or industrial activity. It is an abstract concept encompassing all the elements of a professional activity that generate sales, with the exception of real estate.
The premises used to run the business do not therefore form part of the business. The sale of the premises will be subject to a different legal regime from the sale of the business. However, the right to the lease, i.e. the rental contract allowing the business to be carried on in the premises (if the owner of the business is not the owner of the premises), forms an integral part of the business.
A business should be distinguished from a craft business, which belongs to a craftsman. Artisans earn their income from their work, not from speculating on goods or labour. Similarly, a business is not the same as a self-employed person's business, in which only a self-employed activity can be carried out (doctor, lawyer, notary, etc.). A business may only be owned by a trader.
These distinctions are important, particularly in the event of the sale of the business: the legal regime for the sale of a craft or self-employed business will not be the same as for the sale of a business.
The components of a business
A business consists of tangible and intangible assets. Not all the items we will be looking at are necessarily present in every business, with the exception of the customer base, which is the only item that must be included in every business. Similarly, this list is not exhaustive.
The intangible elements of a business
The customer base
The essential element of a business, without which it could not exist, is the customer base. It is the principal element. The customer base is made up of all the people who have a business relationship with the owner of the business. This is why, when selling a business, the activity must be effective and must not have ceased (except perhaps for a short time), otherwise the business would no longer exist. The other elements of the business would then have to be sold, but this sale would no longer be subject to the specific rules governing the sale of businesses.
Leasehold rights
As its name suggests, the right to a lease is the right of the owner of the business to rent the premises in which the business is run. If the business is sold, the purchaser benefits from this right to the lease and becomes the lessee of the premises. However, the transfer of the lease with the business must comply with certain formalities. These formalities are discussed in greater detail here: sale of a business and leasehold rights.
The leasehold interest is a very important component of the business. It is what allows the business to be run from the premises. However, this right does not always exist, particularly when the owner of the business also owns the premises.
Sign or trading name
A sign or trading name identifies the business.
Patents
A patent is an exclusive right that gives its owner a monopoly on exploitation for a limited period.
The public house licence
A public house licence is a permit issued by the authorities allowing a shopkeeper to sell drinks. There are different types of licence, depending on the type of drink (category 1, 2, 3 or 4).
The tangible elements of a business
The tangible elements of a business are :
Furniture and equipment
These are all items of furniture used in the business (e.g. vehicles, tables, chairs, machinery, etc.).
Goods
These are goods intended for sale, raw materials, etc.