How and When to Notify Customers of a Change in Business Ownership in Ontario

Somewhere between signing the purchase agreement and opening the doors under new ownership, someone has to tell the customers. There’s no single law that spells out exactly how to do this, but how and when you notify customers of a change in ownership can affect goodwill, contract obligations, and even legal exposure if the wording promises more than the buyer intends to deliver.

This article walks through what a good notification generally covers, when to send it, and where wording can create obligations you didn’t intend.

Is Notifying Customers Legally Required?

For most retail and service customers, there’s no general legal requirement to send formal notice of a change in ownership. But that’s not universally true: some customer contracts, service agreements, subscriptions, warranties, or supply arrangements, include their own notice or consent requirements, particularly if the contract needs to be assigned to the buyer to continue. Whether notice is legally required, versus simply good practice, depends on what’s actually in your customer contracts.

What a Good Notification Letter Covers

1. Who bought the business and, if relevant, when the sale becomes effective.
2. What is, and isn’t, changing — hours, staff, pricing, location — so customers aren’t left guessing.
3. What happens to outstanding commitments — gift cards, deposits, ongoing service contracts, warranties — stated clearly rather than left ambiguous.
4. How to reach the business going forward, including any new contact information.
5. A warm, professional tone that reassures customers the transition is planned and orderly.

Timing: Before or After Closing?

There’s no single correct answer, and it often depends on the deal structure and confidentiality obligations in the purchase agreement itself. Some purchase agreements restrict what either party can say publicly before closing actually happens, to avoid disrupting the business if the deal doesn’t close as planned. Many businesses time formal customer notice for at or shortly after closing, once the transaction is final, rather than while it’s still pending.

Legal Risks of How You Word It

This is where notification stops being purely a communications exercise. A few things worth being careful about:

• Don’t promise continuity you can’t guarantee. Statements like "nothing will change" can create expectations, and in some cases arguments about representations made, that don’t match the actual deal terms, especially around warranties or service commitments.
• Be precise about what the buyer is and isn’t assuming. In an asset purchase, the buyer generally only takes on the specific liabilities the purchase agreement says it’s assuming. A notification letter shouldn’t imply the buyer is honouring every past commitment of the seller unless that’s actually true.
• In a share purchase, the corporation itself continues, so its existing customer contracts and obligations generally continue with it. The notification can be more about the internal ownership and management change than a change in who the customer is contracting with.
• Don’t use the letter to make new binding promises — extended warranties, special pricing — without running them past whoever is handling the legal side of the transaction.

A Customer Notification Checklist

• [ ] Confirm what the purchase agreement allows you to say and when
• [ ] Identify any customer contracts that require notice or consent to continue
• [ ] Draft language that describes what’s changing without overpromising continuity
• [ ] Clarify treatment of gift cards, deposits, and open service commitments
• [ ] Have the letter reviewed if it touches on warranties, contract assignment, or liability
• [ ] Choose a timing that respects any confidentiality terms in the purchase agreement

Frequently asked questions