Selling a pet grooming or dog daycare business in Canada

A busy grooming salon or dog daycare has something buyers like: regular clients who come back every few weeks. Buyers will want to know whether those clients will stay with a new owner, whether the groomers will stay too, and whether the space and licence allow the business to keep running as it does now. Here is what to expect and how to prepare.

What buyers look at first

Most buyers of a pet grooming, daycare or boarding business ask the same questions early. Have clear answers ready before you list:

• Sales and profit. Two or three years of numbers, split between grooming, daycare, boarding, training, self wash and retail.
• Regular clients. How many active clients you have, how often they book and how many came back last year.
• The schedule. How full each groomer and the daycare are, and how far ahead you are booked.
• The people. Who grooms, who handles the dogs, how they are paid and whether they plan to stay.
• The space. The lease, the zoning, drainage and ventilation, outdoor areas and noise.
• The licence. Your city business licence and any limits on the number of dogs or hours.
• Your time. How many hours you groom or work the floor yourself, and who covers for you.

Buyers will check these during due diligence, so it helps to gather them now. Our list of documents needed to sell a business is a good start.

Proving the sales and the regular clients

Run every sale through your booking or point of sale software and deposit everything, including cash and tips you report, to the business bank account. Make sure the totals match your bank deposits, your sales tax returns and your tax returns. If you cannot show a sale on paper, most buyers will not pay for it.

Your booking software is your best evidence. Pull reports showing active clients, visits per client, rebooking rate, no shows and the schedule for the next few weeks. Standing appointments, such as a dog groomed every six weeks, and daycare regulars are the income a buyer values most.

If you groom full time yourself, list your wage and any personal costs run through the business as add-backs with proof, and be honest about what it would cost to hire a groomer to replace you. See making your business run without you.

Packages, gift cards and deposits

Count every unused daycare package, punch card, boarding deposit, gift card and account credit that clients still hold. These are visits the buyer will have to give without being paid again, so they are usually taken off the price at closing. See working capital when selling. If clients pay by monthly membership, check early whether the billing can move to the buyer without each client signing up again.

Groomers and staff

In many grooming salons, clients are loyal to a groomer as much as to the business. Be open with a buyer about how many clients book with each groomer, whether groomers are employees, commission staff or renting a station, and whether any have said they plan to leave or open their own shop. A buyer may ask for a key groomer to stay through the handover, or to keep part of the price back until the clients have settled in. See holdbacks.

In British Columbia, section 97 of the Employment Standards Act says that when a business is sold, the employment of an employee is deemed continuous with the new owner. Talk to your lawyer about how staff move over, and read what to tell employees when selling before you share the news. Groomers who are true contractors are a different question, so have their agreements ready.

The space, zoning and the lease

Dogs need the right kind of space: zoning that allows animal care, floor drains, good ventilation, sound control and often an outdoor area. A buyer will want to know the space is allowed for what you do now, not only what it was first used for. Have the lease, any landlord approval for animals and any letters from the city ready.

Check how many years are left on the lease and whether the landlord will let you assign it. A dog business can be hard to move, so a short lease or a landlord who will not consent can lower the price a lot. See the commercial lease when selling.

Licences and dog limits

Most cities and towns require a business licence, and many have extra rules for dog daycares, kennels and boarding. Rules differ from place to place. In BC, for example, Langley City limits a dog daycare to 30 dogs, sets hours of 7 a.m. to 7 p.m. Monday to Saturday, and asks for an animal care plan, a waste plan and a daily register of the dogs in care. Maple Ridge limits a dog daycare to 20 dogs. Mission inspects animal daycares when a licence is applied for.

A business licence usually does not simply pass to a new owner, so ask your city early what a buyer will need, and whether an inspection or zoning check comes with it. Keep your licence, any animal care plan, your dog register and any inspection notes on file. See transferring contracts and licences.

Client and pet records

Client files hold names, phone numbers, addresses, vaccine records, behaviour notes and sometimes payment details. In British Columbia, section 20 of the Personal Information Protection Act allows this kind of information to move to a buyer as part of a sale, but only what is needed, and only under an agreement that limits how it is used. Before a deal closes, share summaries rather than the full client list. See NDAs when selling.

Keep your intake forms, waivers, vaccine policy and incident log in order. A buyer will ask whether you have had dog bites, injuries or complaints, and how they were handled. Being open early is better than a surprise in due diligence.

Equipment and retail stock

List your tubs, tables, dryers, clippers, kennels, fencing, flooring, washers and any van with its age and condition, and note anything leased or financed. Count retail stock such as food, treats and shampoo at closing, and see selling a business with inventory.

A worked example

Questions to take to your lawyer and accountant

• Should this be an asset sale or a share sale?
• How do my groomers and staff move to the buyer, and are any of them really contractors?
• How should packages, deposits and gift cards be handled in the price?
• Will the landlord consent to the assignment and the continued use for animals?
• What will the buyer need from the city for the business licence?
• What client and pet information can I share, and when?
• Can we use the section 167 election, and how does PST apply to the equipment?

For more, read what your lawyer and accountant do. Running a salon for people too? See selling a hair salon or barbershop in Canada. Own a shop that sells pet supplies? See selling a retail store in Canada. Own an animal clinic? See selling a veterinary clinic in Canada. This guide is general information, not legal or tax advice for your situation. Questions about listing with us go to hello@sellmybusinessdirect.com.