After the corporatisation of the veterinary sector and the more recent focus by the Competition and Markets Authority (CMA) on how veterinary practices are owned, and by whom, there has been an abundance of start-ups within the veterinary space.
If you are considering taking the step to practice ownership, there is much to think about; this article explores the various legal aspects you should consider before opening the doors of your own practice.
Commercial contracts
As a veterinary practice owner, you will need to enter into certain commercial contracts, particularly with your suppliers. It is important to ensure that you understand the terms you are signing up to; in particular, you should check the following before signing:
- How you (and the third party) can terminate the contract
- If the contract contains minimum purchase requirements or a minimum period (if so, be sure that these are appropriate for your short-, mid- and long-term goals for the practice)
- What the payment terms are – in particular, you should ensure that the frequency of invoices, mechanisms for payment and the period for settlement of invoices are appropriate
- Your liability – if this is not specified in the contract, you should try to include a cap on your liability
Personal data – collection, storage and processing
You should ensure that the practice has an up-to-date privacy policy and make sure this reflects the practice’s day-to-day activities
The veterinary practice will collect, store and process personal data in respect of customers and its employees. You should ensure that the practice has an up-to-date privacy policy and make sure this reflects the practice’s day-to-day activities.
If you are using third parties to process any personal data (eg payroll providers) you should check that they have appropriate policies and procedures in place for the processing of such data before you share it with them.
Intellectual property
You may not consider that the veterinary practice has, or will have, any of its own intellectual property at the outset, but your logo could be considered key to the business and, therefore, an aspect of intellectual property that needs to be protected. In terms of the design of the logo, if you are using a third party or an employee, you should ensure that ownership of that logo sits with the practice once it has been designed.
Equally important is to ensure that you are not inadvertently “infringing” on any third party’s intellectual property while trading.
Real estate
Regardless of whether you will occupy under a lease (leasehold) or own the property (freehold), there are various legal aspects to occupying property that you ought to be aware of. The considerations will be different depending on the nature of your interest (ie leasehold or freehold), and you should, therefore, take appropriate advice before signing any contracts that relate to the premises.
Corporate and governance matters
It is important to make sure that the way you have set up your practice works for your short-, mid- and long-term goals
There are many ways to set up your practice, whether that be as a sole trader, in partnership or through a limited company. It is important to make sure that the way you have set up your practice works for your short-, mid- and long-term goals.
One of the key drivers for the structure that will work best for your veterinary practice will be determined by the tax treatment. It is, therefore, important to obtain appropriate tax advice before setting up.
If you decide to go into business with another party (whether by way of partnership or via a limited company), it is imperative that you have a basic understanding of the role you play in this business (ie whether that is as a director, shareholder or partner) and have appropriate documentation (such as a shareholders agreement or partnership agreement) in place that will cater for the unexpected (such as what happens to the practice if your business partner dies or there is a fall out between parties).
Employment and immigration
From your own perspective (that of the practice manager, director, shareholder, etc), you need to ensure that you are not in breach of any existing restrictive covenants you are bound by. Typical restrictions include:
- Not to procure business from your previous employer
- Not to accept business from any client who was a client of your previous employer
- Not to entice away anyone who was employed by your previous employer
In extreme circumstances, restrictions can be worded to prevent one from merely taking steps to being involved in a competing business
Each of the above restrictions will have a time limit attached to them, and therefore it is important to check your existing employment contract before taking any steps to set up your own practice. In extreme circumstances, restrictions can be worded to prevent one from merely taking steps to being involved in a competing business.
With regard to employees for the new veterinary practice, you should ensure that you put in place legally compliant documents and systems right at the start; this will include employment contracts, handbooks, right-to-work checks and pension schemes.
Regulatory
You will need to ensure that all veterinary surgeons and nurses have current Royal College of Veterinary Surgeons (RCVS) registrations. If the practice is to dispense veterinary medicines, your practice will also need to be registered with the RCVS.
The practice will also need to ensure that it has appropriate insurances (such as professional indemnity insurance, buildings insurance, employer’s liability insurance) in place before it opens its doors to the public.
Finally, depending on the machinery that the practice has, certain equipment (such as X-ray machines or other radioactive equipment) will need to have certificates, and training given to certain staff members before they can operate the equipment.
