City Council considers new regulations for 'going out of business' sales
The Missoula City Council is looking at revising regulations aimed at protecting consumers and some business owners.
The city’s Special Sales Ordinance outlines rules for going out of business sales. Most Montana cities have similar ordinances in place, but some Missoula business owners say there’s room for improvement.
Todd Frank owns the Trail Head, the outdoor gear store in downtown Missoula. He's been through a competitors’ going out business sale and said it hit his business hard.
“That was the worst three month period in my business in the 13 years I've owned it,” Frank told the Missoula City Council Administration and Finance Committee Wednesday.
Frank said the other business continued to bring in new inventory during the sale and in the end that business made a big profit.
“In their business license they reported somewhere in the neighborhood of about $250,000 worth of inventory,” Frank said. “By the time the sale was done they had done almost $3 million in business.”
Frank said current ordinance needs to be updated. So he's asking the city to revise the rules.
But some council members said it's not the city's business.
“I'm sort of at a loss for why we regulate when a private business can have a sale or call stuff whatever they want to call it,” said Bob Jaffe.
Under the current ordinance business owners need a special license to run a going out of business sale, and it doesn't cost them unless they have more than $50,000 in wholesale merchandise. Businesses also have to submit an inventory list. The sale can run up to 90 days.
The proposed revisions would take it one step further. Half way through the sale, businesses would have to submit another inventory list to prove they aren't restocking. Then, when the 90 days are up the business would have to close its doors.
The challenge now is finding a balance.
“Protecting the retail businesses that compete with that as well as the consumer,” said Frank.
“I don't really see why we're regulating this in the first place,” Hertz said.
A public hearing is scheduled for December 9.
To read the proposal click here.