Shopkeepers Robbed of Their Goodwill

Chronicle (Levin), 10 February 1949, Page 9

Shopkeepers Robbed of Their Goodwill

WELLINGTON, Feb. 9. Small business owners are being organised into a Shopkeepers' Protectivp Assoeiation as the outcome' of alleged inequity in .the legislation raised last session governing tHe sale of business, it was disclosed in Wellington to-day. Selling priees appxoved in recent weeks are quoted as having : stripped a vehdor of £7000 or more representing money paid for goodwill when the business was previously purchased. It was l'earoed to-day that the Proteetion Assoeiation « is proposed /on a national basis and moves are well under way atft Wellington - and Auckland. A provisional committee at Wellington is bding formed and small shopkeepers of all description^ are reported as being ready to aet on protest measures. The draft constitution of the assoeiation says that shopkeepers ' * are forced to protect themselves against this attack on hardworking small business men." It also holds that the Aet appears to have no parallel in inequity in niodern times. The Aet is described as ' ' grossly deflationary. ' ' One of the first aetions expected of the assoeiation will be an approaeh to the Government nrging it to stabilize business values as at December 31, 1948, in the same way .as property was st&bilized in 1942. ■ - The worst affected in recent saies are vendors who themselves bought busiuesses when prices were at their peak between 12 and 18 months ago.. Saies cited as extreme but authentic are:^— Petone milk bar bought for £1450 about 14 months ago, approved selling price £600; Wellington eity apartment liouse bought for £1450 about 18 months ago, approved selling price £545; Islancl Bay dairy bought for £2000 15 months ago, approved selling price £160; It is stated that appxoved prices have seemingly allowed for valuation only ou chattels and stock with no allowance for goodwill. In' the case of plant, too, the figure lias been based on auetion value rather than any consideration of

: replacenient value. , The difference between the vendorys own purehase price of say £1450 and his return of say £600, is caleulated as .being a. virtual reduetion in capitai. Where a.man 18 months ago borrowed perhaps £1000 to go into business and if by -eircumstance is required to sell, it is sta.ted that after losing the business, he would be faced with redeeming the loan without resonrces on which he eould draW. Land agents to whom these complaints had been made, familiarly 1 said that today it was not surprising i that small shopkeepers would be reluctant to sell in present conditions.