Part IV: How to Negotiate Better Terms in the Florida Business Brokers Contract - If You Must Use It
- Evan Howard
- Oct 10
- 13 min read
Important Legal Disclaimer: This article is for general educational purposes only and is not legal advice. It reflects perspectives from experienced North Carolina business attorneys and M&A advisors at Howard Law regarding common risks and best practices in Florida business transfers. This is not a Florida legal opinion. Florida law questions should be directed to a Florida-licensed attorney. Reading or relying on this article does not create an attorney-client relationship with Howard Law.
Our Position Remains Clear - Don't Sign the BBF Contract
After three comprehensive parts analyzing the Business Brokers of Florida standard Asset Purchase Agreement, Howard Law's position remains unchanged: buyers should refuse to execute this document in any form and instead demand attorney-drafted purchase agreements that actually protect their interests. The overwhelming buyer disadvantages we've documented across this series make the BBF contract unsuitable for any serious business acquisition.
However, we recognize that some buyers may face situations where executing this form feels unavoidable - competitive markets where sellers refuse custom documentation, franchise systems requiring specific forms, or transactions where brokers claim the BBF contract is "non-negotiable." While we strongly discourage proceeding under these circumstances, we offer the following negotiation strategies for buyers who feel they must work within this flawed framework.
The proposed modifications discussed below are based on North Carolina law concepts and standard commercial practices. Florida law may differ significantly in interpretation, enforceability, and practical implementation of these provisions. Any buyer considering modifications to the BBF contract must engage qualified Florida business attorneys to ensure proposed changes comply with Florida law and actually provide the intended protections.
Remember: every dollar spent on independent legal counsel to negotiate these improvements is typically worth ten dollars in avoided disputes and better risk allocation. The BBF form's systematic bias against buyers cannot be completely eliminated through modifications, but these changes can reduce some of the most egregious problems.
Business Brokers of Florida Form Asset Purchase Agreement:
The Pre-Execution Strategy: Never Sign Without These Conditions
Before addressing specific clause modifications, buyers must establish proper negotiation conditions. Never execute the BBF contract as presented. Instead, insist on these preliminary requirements that create space for meaningful negotiations and protect your interests from the outset.
First, demand execution of a proper Letter of Intent before any binding purchase agreement. The LOI should establish key business terms, due diligence periods adequate for thorough analysis (minimum 45-60 days for most transactions), financing contingencies with specific seller cooperation requirements, and clear termination rights during due diligence. This prevents brokers from rushing you into binding agreements before you understand what you're buying. Keep in mind, you will most likely be denied and belittled. The vast majority of brokers, not just Florida brokers, are under the impression that LOI are not useful in these Main Street business acquisitions. While we acknowledge the LOI is non-binding and merely an agreement to create an agreement - it allows the parties to flesh out a lot of the main topics to identify if there is at least a basic understanding of the proposed agreement.
Second, require that all contract modifications be reviewed and approved by your Florida business attorney before execution. This creates space for the legal analysis necessary to implement the changes discussed below while establishing that broker explanations of legal terms constitute unauthorized practice of law.
Third, insist that earnest money deposits be held by qualified, independent escrow agents rather than transaction attorneys who may have conflicts of interest - IF you are required to do a deposit at all. The escrow agreement should specify objective release criteria and prohibit escrow agents from using deposited funds to pay their own legal fees in disputes.
Major Restructuring: The Eight Most Critical Modifications
1. Earnest Money and Deposit Provisions
Original BBF Language (Section 1): The contract typically requires substantial additional deposits "upon acceptance of offer by Seller" with liquidated damages provisions allowing sellers to retain all deposits upon buyer default regardless of actual damages suffered.
Proposed Modified Language: "Buyer shall deposit the sum of $[X] as earnest money within business days of execution of this Agreement. No additional deposits shall be required prior to completion of due diligence. Upon satisfactory completion of due diligence and receipt of financing commitment, Buyer shall deposit an additional $[Y]. All deposits shall be refunded to Buyer if: (a) due diligence reveals material adverse conditions not previously disclosed; (b) financing is denied despite good faith efforts; (c) Seller materially breaches this Agreement; or (d) Seller fails to maintain business operations in substantially the same manner as historically conducted."
How This Fixes the Problem:This modification eliminates upfront deposit traps by tying additional deposits to successful completion of major contingencies. It provides specific, objective criteria for deposit return rather than seller-favorable liquidated damages provisions. The language protects buyers from losing deposits due to seller problems while still demonstrating buyer commitment once key milestones are achieved.
Note: This is under the assumption the seller is requiring an escrow deposit. Always start with the position that an escrow deposit is not necessary.
2. Due Diligence Period and Seller Cooperation
Original BBF Language (Section 8): Provides compressed due diligence periods (28 days in our example) with seller discretion over document production timing and subjective buyer satisfaction standards.
Proposed Modified Language: "This Agreement is contingent upon Buyer's satisfactory completion of due diligence investigation extending for sixty (60) days from execution ('Due Diligence Period'). Seller shall provide all requested business documents within five (5) business days of request, including but not limited to: financial statements for preceding three years, tax returns, customer and vendor contracts, employee records, insurance policies, and governmental permits. Seller's failure to timely provide requested documents shall automatically extend the Due Diligence Period until five (5) days after complete production. Buyer may terminate this Agreement during the Due Diligence Period for any reason by written notice, whereupon all deposits shall be immediately refunded."
How This Fixes the Problem:Extended due diligence periods provide adequate time for thorough business analysis. Specific document production requirements with automatic extensions prevent sellers from running out the clock. Objective termination rights eliminate subjective satisfaction standards that create dispute opportunities. The provision shifts the burden to sellers to cooperate rather than allowing them to control information flow timing.
Note: Depending on the specific business, business size and the team you have assisting you in due diligence, you may be able to finish due diligence within thirty (30) days - but that assumes you have all your requests in order, seller is quick to provide and you have assistance in reviewing. Most of these Main Street brokers will tell you that you do no need sixty (60) days to complete due diligence but remember, this is your business, your transaction and your investment - if they wanted to have a say in how you conduct your business, they can put their money where their mouth is and invest!
3. Seller Representations and Warranties
Original BBF Language (Section 6): Contains numerous "to the best of Seller's knowledge" qualifications that provide escape routes from disclosure obligations, particularly regarding litigation, regulatory compliance, and financial accuracy.
Proposed Modified Language: "Seller represents and warrants the following as of the date hereof and as of Closing: 6.2 There are no pending, threatened, or reasonably anticipated legal actions, lawsuits, investigations, or proceedings involving the Business, and Seller has not received any notices or communications suggesting potential claims. 6.5 The Business and premises comply in all material respects with all applicable laws, regulations, permits, and licenses required for operation. 6.X Attached Schedule X contains complete and accurate disclosure of all material facts that could adversely affect Business value or operations, including pending regulatory matters, customer disputes, employee issues, and known operational problems."
How This Fixes the Problem: Removing "knowledge" qualifications makes sellers responsible for facts they should know about their own businesses. Adding disclosure schedule requirements forces affirmative disclosure rather than allowing sellers to disclaim knowledge. The modifications create enforceable standards rather than subjective escape routes while providing buyers with clear remedies for non-disclosure.
4. Default and Escrow Provisions
Original BBF Language (Section 9): Allows sellers to retain deposits as liquidated damages for any buyer default while providing limited, expensive remedies for seller defaults.
Proposed Modified Language: "9.1 If Buyer defaults after expiration of all contingency periods, Seller may either: (a) terminate this Agreement and retain deposits only to the extent of actual damages suffered, not to exceed 50% of total deposits; or (b) pursue specific performance. 9.2 If Seller defaults, Buyer may: (a) terminate and receive immediate refund of all deposits plus reimbursement of reasonable costs incurred; or (b) pursue specific performance with Seller responsible for Buyer's costs and attorneys' fees regardless of outcome. 9.3 Any dispute regarding default or deposit retention shall be resolved through binding arbitration with costs borne by the non-prevailing party."
How This Fixes the Problem: This modification limits liquidated damages to reasonable amounts related to actual harm and provides buyers with equal remedies for seller defaults. The arbitration provision creates faster, less expensive dispute resolution while eliminating forced Florida venue disadvantages. Balanced cost allocation removes economic barriers to pursuing legitimate claims.
5. Indemnification Terms and Post-Closing Escrow
Original BBF Language (Section 18): Provides minimal post-closing escrow with theoretical unlimited seller liability that proves meaningless in practice.
Proposed Modified Language: "18.2.2 Seller shall deposit $[X] representing [10-15%] of purchase price into post-closing escrow for eighteen (18) months to secure indemnification obligations. Escrow funds shall be released upon: (a) expiration of escrow period with no pending claims; (b) resolution of all pending claims; or (c) mutual written agreement. 18.3 Seller's indemnification obligations shall survive Closing for thirty-six (36) months for general representations and six (6) years for tax matters. Claims must be asserted within applicable survival periods but resolution may extend beyond such periods."
How This Fixes the Problem: Substantial escrow amounts provide meaningful security for indemnification claims rather than token amounts that provide no real protection. Extended survival and escrow periods recognize that business problems often take time to surface. The provision creates practical remedies rather than theoretical protections that prove worthless when disputes arise.
Note: If you have a seller note associated with the transaction, you can achieve the same result by including a Right to Offset clause within the agreement.
6. Financing Contingencies and Seller Cooperation
Original BBF Language (Section 12): Often marks transactions as "not contingent" on financing or provides vague "reasonable cooperation" requirements without specific performance standards.
Proposed Modified Language: "12.1 This Agreement is contingent upon Buyer obtaining financing of $[X] at interest rates not exceeding [Y%] with terms acceptable to Buyer in Buyer's sole discretion. 12.2 Seller shall fully cooperate with Buyer's financing efforts, including: providing financial information in lender-required formats, participating in lender meetings and site visits, maintaining books and records in normal course, and executing reasonable lender-required documents. 12.3 If financing is denied despite Buyer's good faith efforts and Seller's full cooperation, this Agreement shall terminate with immediate refund of all deposits to Buyer."
How This Fixes the Problem: Specific financing contingencies protect buyers from being forced to close without adequate funding. Detailed cooperation requirements prevent sellers from undermining financing efforts while providing objective standards for performance. The good faith standard protects both parties while ensuring buyers aren't trapped in unfundable deals - which is a decision that can be made by the bank; completely outside of buyers control.
7. Environmental and Regulatory Disclaimers
Original BBF Language (Section 45): Shifts all environmental investigation and liability to buyers while providing detailed warnings that protect brokers and sellers from responsibility.
Proposed Modified Language: "45.1 Seller represents that it has no knowledge of environmental contamination, hazardous materials, or regulatory violations affecting the Business or premises. 45.2 Seller shall provide all environmental reports, studies, permits, and correspondence with regulatory agencies in Seller's possession. 45.3 Buyer shall have the right to conduct environmental inspections at Buyer's expense during due diligence. 45.4 If environmental problems are discovered during due diligence, Buyer may: (a) terminate and receive full deposit refund; (b) require Seller to remediate at Seller's expense; or (c) negotiate purchase price reduction. 45.5 Seller shall indemnify Buyer for pre-Closing environmental liabilities not disclosed prior to Closing."
How This Fixes the Problem: This modification requires affirmative seller representations about environmental matters rather than broad disclaimers. It provides buyers with meaningful options when problems are discovered during due diligence rather than forcing acceptance of unknown risks. The indemnification provision ensures sellers bear responsibility for undisclosed pre-closing environmental issues.
8. Venue, Governing Law, and Attorney Fees
Original BBF Language (Sections 35-36): Forces Florida venue and law while creating attorney fee shifting that discourages buyer enforcement of contract rights.
Proposed Modified Language: "35.1 This Agreement shall be governed by the laws of the State of [INSERT STATE]. 36.1 Each party shall bear its own attorneys' fees and costs except that the prevailing party in arbitration may recover reasonable fees if the arbitrator determines the non-prevailing party's position was frivolous or brought in bad faith."
How This Fixes the Problem: Limiting fee shifting to bad faith cases removes economic barriers to pursuing legitimate claims while deterring frivolous disputes. Neutral venue selection eliminates automatic home field advantages that favor local parties.
Note: This is an often overlooked clause but can detrimental impacts if not properly thought through. The Florida broker will tell you the jurisdiction needs to be in Florida, because the business you are buying is in Florida - but that blanket thinking is wholeheartedly flawed. Let me give you a great example of an acquisition we recently completed where seller lived in South Carolina, buyer lived in North Carolina and business was located in Florida - where is jurisdiction tethered for the purchase agreement between seller and buyer?
Florida wouldn't be a likely choice since neither party resides in Florida. Seller wants it in South Carolina while buyer wants it in North Carolina - how do you solve this problem? Well, even though in our case the seller and buyer lived within 20 minutes of each other (in different states), we actually split jurisdiction as follows:
Governing Law; Venue. This Agreement shall be governed by and construed in accordance with the internal laws of the State of North Carolina, without regard to the conflicts of law principles of such State and shall be governed and construed in accordance with the laws of the State of North Carolina. The Parties further agree and consent to personal jurisdiction of the State of North Carolina or South Carolina, depending upon the following described scenarios. If Purchaser has any grievances subject to the terms of this Agreement, it has the right to pursue legal action in a competent court in Gaston County, North Carolina or the United States District Court for the Middle District of North Carolina, and Seller waives any object to venue laid therein. If Seller has any grievances subject to the terms of this Agreement, it has the right to pursue legal action in a competent court in York County, South Carolina or the United States District Court for the Rock Hill Division of South Carolina, and Purchaser waives any object to venue laid therein.
Secondary Improvements of Protection
Beyond the eight critical modifications above, buyers with sufficient negotiating leverage should address these additional problem areas to further balance the contract's systematic seller favoritism.
Broker Commission and NDA Modifications: Limit the NDA's procuring cause period to six months instead of two years. Require full disclosure of broker compensation arrangements with sellers before NDA execution. Remove broker authority to place liens or act as attorney-in-fact. Add provisions requiring broker compliance with all licensing and UPL requirements.
Note: Sellers beware, there have been many worthy buyers interested in your business but have walked away without you even knowing due to a bad business broker.
Assignment and Entity Structure Flexibility: Allow buyers to assign to affiliated entities without seller consent. Eliminate personal guarantee provisions that negate entity liability protection. Provide buyers with the same assignment rights granted to sellers throughout the contract.
Closing and Performance Conditions: Add specific seller obligations to maintain business operations, customer relationships, and employee retention during the pre-closing period. Include material adverse change provisions that allow buyer termination if business conditions deteriorate significantly before closing.
The Critical Implementation Warning
These proposed modifications represent significant departures from the BBF form's seller-favorable structure and will likely meet substantial resistance from brokers and sellers accustomed to one-sided terms. Successful implementation requires several critical elements that most buyers cannot accomplish without professional guidance.
First, you must engage experienced Florida business attorneys to review, modify, and negotiate Florida-specific business contracts. The language provided above reflects North Carolina law concepts that may not translate directly to Florida requirements. Florida attorneys can ensure modifications comply with state law while providing the intended protections. In most circumstances, out-of-state attorneys and qualified M&A advisors can also assist in coordinating transaction terms, due diligence, and negotiation strategy.
Second, you need sufficient negotiating leverage to demand these changes. In competitive markets or situations where sellers have multiple interested buyers, securing these modifications may prove impossible without walking away from deals entirely.
Third, you must be prepared for brokers to resist these changes because they expose brokers to UPL violations when they attempt to explain or negotiate legal modifications. Brokers may pressure you to accept original terms rather than acknowledge their inability to handle legal negotiations.
Why These Fixes Don't Solve the Fundamental Problem
While the modifications above can reduce some of the BBF contract's most egregious buyer disadvantages, they cannot eliminate the fundamental problem: this document was created by and for the brokerage industry to systematically favor sellers while protecting brokers from liability. Even with extensive modifications, the underlying structure remains problematic.
The copyright disclaimer on every page still protects BBF from liability for harm caused by their form. The broker protections remain extensive throughout the document. The complex, lengthy structure still creates opportunities for problems that simpler, attorney-drafted agreements would avoid entirely.
Most importantly, the process of negotiating these modifications with brokers who cannot legally explain or negotiate contract terms creates additional UPL violations and practical complications that professional transaction management would eliminate.
Continued Recommendation: Draft Your Own Agreement!
Despite providing these modification strategies, Howard Law's recommendation remains unchanged: refuse to execute the BBF contract in any form and insist on attorney-drafted purchase agreements tailored to your specific transaction and protection needs.
Attorney-drafted agreements can provide superior protection through structures designed around your interests rather than broker and seller favoritism. Custom agreements eliminate the bias built into the BBF form while creating clearer, more enforceable terms that actually protect buyer interests.
The cost of custom legal documentation is invariably less than the potential losses from executing modified versions of fundamentally flawed agreements. When you control the document creation process, you avoid the need to negotiate away seller advantages and instead build buyer protections from the ground up.
Modifications Can Help, But Starting Fresh Is Better
The modifications outlined in this analysis can significantly improve the BBF contract's buyer-unfavorable terms if properly implemented with qualified Florida legal counsel. However, they represent attempts to fix a fundamentally broken document rather than creating proper protection from the beginning.
Buyers who find themselves forced to work within the BBF framework should understand that these modifications require substantial negotiating leverage, professional legal implementation, and willingness to walk away if adequate changes cannot be secured. Many sellers and brokers will resist these changes precisely because they eliminate the systematic advantages the original form provides.
The better approach remains engaging experienced business attorneys to draft custom purchase agreements that protect your interests without requiring extensive modifications to eliminate seller favoritism. When you control the document creation process from the beginning, you can build appropriate protections rather than trying to negotiate away systematic disadvantages.
At Howard Law, we provide experienced guidance for buyers who want proper protection in business acquisitions rather than modified versions of problematic industry forms. Our approach focuses on custom documentation that serves client interests while ensuring successful deal completion with appropriate risk allocation.
Don't let industry pressure to use "standard" forms cost you thousands of dollars in unnecessary risks and inadequate protections. Demand better treatment through professional documentation that actually serves your interests throughout the transaction process.
Howard Law is a North Carolina business law and M&A advisory firm providing experienced guidance to buyers and sellers navigating complex business transactions nationwide. We specialize in protecting client interests while ensuring compliance with applicable legal requirements. Contact us at www.ehowardlaw.com for consultation on your business acquisition needs.
Comments