THE FOOD FACTORY BUYING GUIDE
Step 1 - Source for the RIGHT Food Factory
Choosing a food factory is critical for your business operations. You can search for a food factory from property portals, advertisements or engage an agent to assist you in your search for the food factory. Do always take note of the specifications on the food factory other than price, location and tenure, specifications are equally important or it will be detrimental to your business. Do check with the owners, food professional or a well verse property consultant on these matters before committing to a purchase. Do check on the maintenance fee of the food factory as well, maintenance fee is usually higher than other general factories.
Step 2 - Negotiation
Negotiation is a science as well as an art. As important as choosing the correct factory, the price must be justifiable based on recent market transactions as well as the internal fixtures and condition of the food factory. A sound research and analysis of the food factories in the vicinity and the market will assist you to buy a food factory at a reasonable price that will preserve in value. Also check for a bank indication on the premise via a banker.
Step 3 - Bank Loan
This will come hand in hand with STEP 2. Do ensure that you are able to obtain a bank loan before you commit to purchase a food factory. Calculate your finances to know your capital outlay, typically banks grant up to 80% for food companies in their purchases. Do take note of other expenses in connection with the Sale and Purchase like legal fees and stamp duty. Do check for perks from bank like legal fees subsidy, fire insurance, etc. Do remember many food factories do attract GST.
Step 4 - Offer to Purchase
Before receiving an option to purchase after negotiation it is often wise to put in an offer to purchase stating the terms and conditions like price, option period and completion period together with a 1% Option Fee to the Vendor (Seller) in exchange for an Option to Purchase (OTP).
Step 5 - Option to Purchase
An Option to Purchase (OTP) is an agreement between the Vendor (Seller) and the Buyer giving the Buyer the exclusive rights to buy the food factory. The standard time frame given to “reserve” the property is usually 14 days or known as the Option Period, thereafter the Buyer has to exercise the document with a balance payment of between 4% or 9% forming the deposit sum. Upon receiving the OTP, Buyers should engage a conveyancing lawyer to assist on the execution of the OTP. And with the OTP, you will have to provide a copy of the document to your bankers to process the loan for disbursement for completion.
Step 6 - Completion
Completion period will take around 8 to 12 weeks after you exercise the OTP, where a lodgement and exchange of the title will be in your name. Thereafter you are able to collect your keys to your Food Factory!
*Do note that, this process is applicable to completed food factories. For any doubts do seek professional legal advice. (Does not apply to building under construction or JTC Landed Food Factory)