Obtaining an accident towing licence in Victoria is far more difficult than one might assume. The number of towing licences is fixed by the Minister for Roads, and with a sufficient number of licences currently operating, prospective purchasers are compelled to seek out a vendor of an existing licence. Coupled with the fact that accident towing licences in Victoria don’t expire, this becomes an expensive prospect, with licences generally selling for upwards of $300,000.
Transferring a tow truck licence
When buying or selling a towing licence there are a number of important considerations for the parties to contemplate.
Firstly, VicRoads will require a swathe of information from a prospective purchaser before agreeing to transfer the towing licence to them.
The purchaser will need to submit an application form to VicRoads identifying the licence(s) to be transferred, as well as ancillary documentation such as: a current Accident Towing Driver Authority; and proof of ownership of the depot from which the licence is proposed to be operated from.
Generally, a purchaser will not wish to operate a towing licence from its current depot, which then necessitates applying to VicRoads to have the depot specified in the licence changed.
Applying to alter a towing licence depot
Each towing licence in Victoria is allocated to a particular towing depot. An application can be made to VicRoads to alter the depot specified in a towing licence, however there is no certainty that such an application will be approved.
VicRoads will analyse towing statistics regarding the proposed move in order to determine whether there is any justification for the move, with commercial considerations for the purchaser given next to no weight in the decision-making.
If the proposed new premises is not already operating as a depot, the application form will need to include:
• A letter from the local municipal council in support of the application;
• evidence that the applicant has the right to conduct an accident towing services business from the proposed depot; and
• letters or documentation from an industry group or government body in support of the application.
Whether or not the new premises is already operating as a depot, the application form will also need to demonstrate to VicRoads’ satisfaction that the move will be in the public interest and provide the most utility for motorists in the area.
The contract is key for towing licence transactions
The most important aspect of purchasing a towing licence is that the contract of sale is correctly drafted. With so many moving parts to a transaction, the contract must contemplate each step to ensure that the sale can proceed smoothly to settlement.
As a first step, the contract of sale should provide that settlement is conditional upon approval being granted by VicRoads to transfer the licence, including any change to the depot.
As VicRoads may take several weeks to approve the transfer of a towing licence and any associated change in depot, at a minimum the contract should also provide for:
• a deposit to be paid on signing, with the remainder due at settlement;
• a time period within which the purchaser must submit all applications to VicRoads for approval; and
• a sunset date by which the contract will be terminated if the transfer has not been effected.
Pointon Partners has a wealth of experience in towing licence transactions. If you are considering selling a towing licence or have identified a vendor to purchase from, please don’t hesitate to contact Michael Bishop or Ben Drysdale to discuss.