Advice for Buying a Restaurant and Selling a Restaurant

Robin Gagnon of We Sell Restaurants Achieves CFE (Certified Franchise Executive) Designation

Posted by Robin Gagnon on Jun 14, 2019 9:34:00 AM

Robin Gagnon, co-founder of We Sell Restaurants has completed the study and testing to attain her Certified Franchise Executive (CFE) designation offered through the International Franchise Association. 

A passionate leader in the franchise community, Robin joins those worldwide who demonstrate strong credibility in their franchising expertise by study and testing for the designation.  She serves on the Executive Board of the Women's Franchise Network - Atlanta and is the past leader of that team.  She is also on the a member of the Women's Franchise Committee at the national level of the International Franchise Association.

Robin GagnonThe mission of the Institute of Certified Franchise Executives™ (ICFE) is to enhance the professionalism of franchising by certifying the highest standards of quality training and education. Among franchise leaders, the CFE designation has become widely known and recognized as a mark of distinction.

Why this, Why Now?  Gagnon says, “I undertook the study to become a CFE as a lifelong student dedicated to professional development.  It’s the same reason I achieved my Certified Business Intermediary or CBI status in business brokerage.  The process of learning does not end with graduation from a university, in my case, with an MBA.  It requires constant affirmation and commitment to study to stay current.  As a business broker with many franchise clients as well as a franchisor of our brand, We Sell Restaurants, it’s critical to understand the industry on every level, including the legal and finance sides, as well as the marketing and sales.  The CFE designation tells others in the industry that I am serious about franchising and I understand all the nuances.”

What was the course of study? “3500 credit hours were required which included a combination of experience, classroom study and online classwork.  The curriculum ranged from marketing to legal and financial considerations of franchising, as well as ultimately, testing.” 

What was your favorite part?  “The interaction with peers at classes attended during the International Franchise Association (IFA) conferences was the best part of the program.  I made valuable contacts and learned from others in all levels of franchising.  I was paired with everyone from leaders of 1,000 unit brands to start-up franchisors. There was an immeasurable amount of talent in each course and everyone was generous in sharing their talent and experience.”

How does someone get the combination of experience and credit hours to attain their CFE? “The IFA does an excellent job of providing educational opportunities including everything from Wednesday “Webinars” to classroom courses.  Experience credits are granted for attendance at local events like the SEFF Southeast Franchise Forum or the Women’s Franchise Network of Atlanta (WFN) and of course, the IFA convention each year.  Through a combination of attendance at events, study online and coursework at conference, you can earn your CFE in one to two years.”   

How will you use your CFE?  As a franchisor and co-founder of We Sell Restaurants, we are already using the knowledge from my CFE studies to implement best practices and build a brand for the future.  As a business broker focused on franchise resales, my clients, including major brands and single units, know they are getting representation from someone committed to the ideals of the CFE. These include professional development, peer networking, industry recognition, professional standing, and commitment to franchising.”

Do you recommend others interested in franchising commit to their CFE?  “Absolutely. It requires a strong commitment of time and money but it pays off.”

Is there a graduation ceremony?  “There is!  I will walk the stage at the next International Franchise Association conference in February next year.”

For more information on Robin’s franchise listings, visit this link online.

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Topics: Buying a Restaurant, Selling a Restaurant

4 Must Know Landlord "Gotcha's" to Avoid when Leasing a Restaurant

Posted by Robin Gagnon on Jun 11, 2019 9:11:00 AM

The team at We Sell Restaurants have told you for years that the landlord is not your friend.  Need further proof?  Here are examples of scenarios that you absolutely want to avoid when leasing a restaurant. 

leasing a restaurant-1As Restaurant Brokers, we focus on key fundamentals in the lease transaction.  These include, "What could pull down the value of the business?”  After all, we are selling businesses generating income.  Any clause in the lease unfair to the party leasing a restaurant affects the value and simply may not be fair.  With those thoughts in mind, here are four lease clauses anyone leasing a restaurant should have their Restaurant Broker examine and attempt to negotiate in lease assignments or new leases.  These include: 

  • Relocation/Redevelopment Clauses
  • Radius Clauses
  • Acceleration Clauses
  • Forced Removals.

Relocation/Redevelopment Clauses.  These are the clauses in a lease that allow a landlord to move a tenant within the same center (relocate) if the landlord is redeveloping for a different tenant.  For example, Jodie’s Bakery has been on the corner of the shopping center for three years and has established a great clientele.  An unrelated tenant, like Publix, comes in and says, I’ll take 35,000 square feet of your shopping center but we require the corner location and the other empty space.  Under a relocation clause, the landlord will have the option to move the tenant into a “comparable” new space and pay for it.

Does this affect Jodie’s Bakery?  Yes.  There will be an immediate impact on the business.  Jodie has no control over where the business moves, and Publix operates a bakery department right where her old business was standing.  Any tenant coming looking at a redevelopment or relocation clause should have a strong restaurant broker in their corner working to strike this language.  We focus on this as we work to preserve the value of the business over the lifetime of the lease. 

Radius Clauses.  This is a clause in the lease that states the restaurant owner may not operate within a certain radius of the shopping center.  In return for the ability to lease this space, the landlord is going to “lock-out” the tenant from any other space within an x-mile radius. This is an inherently unfair clause for the tenant. 

Business may shift away from the corridor he’s currently in and just half a mile west, where he’s now prohibited from locating.  A new shopping center may open and offer him a great deal to come on board and he would not be able to open a second location.  A competitor may offer to sell out his location but if it’s within the radius cited in the lease, he could not do so.  This is a landlord clause open to negotiation and a bully tactic on the part of the landlord.  It should be negotiated as part of the lease assignment because it affects the value of the business in the future and it is fair to ask.

Acceleration Clauses.  An acceleration clause is a clause that allows the landlord to “accelerate” the rent due in the event the tenant defaults.  These clauses have been held to be illegal in many states and landlords know this but still sneak them in as an intimidating factor to a tenant.  If the tenant defaults on a lease in his second year of a five year lease, under an acceleration clause, the landlord could make a claim for the entire amount of rent for the next three years, a much bigger obligation.  This makes a business less valuable and increases risk to a buyer.  We Sell Restaurants works to eliminate this clause where possible.  

Forced removal clauses.  These are dangerous clauses because they often bury language related to the assets.  A clause may include language like this, “At the end of the term or at the time of a forced removal, the tenant must vacate the premises and relinquish all furniture, fixtures and equipment.”  That means the tenant would lose any claim to his own assets.  Another dangerous piece of language within this clause may say, “Tenant shall restore the shell…”  That means the tenant must take everything out and it back to a cold grey shell or white box condition.  This could be very costly to a tenant and there are cases where they have had to spend many thousands of dollars to restore a location to its prior condition. The fix to this language proposed by most is simple at the outset but very costly later.  You simply insert the following language (subject to attorney review), "Notwithstanding xxx (removal clause), landlord will not require removal of improvements."

Another option is to simply have the landlord waive his right to the assets.  This is critical in certain states (like Texas) where a landlord can lock a tenant out with just 5 days-notice for non-payment.  If a lien waiver is in place, a lockout is prevented since the landlord will essentially be subject to theft by conversion if he locks the tenant out from his own property.  It is much easier to get language such as this negotiated up front when leasing a restaurant than try to negotiate it on the back end of a troubled lease term with late payments. 

An agreement with a landlord for leasing a restaurant can be as simple as a few pages and run to many hundreds of pages. It is not something to be taken lightly, but rather should involve the services of those familiar with the process and the clauses landlords will use to their advantage. 

Check out our many options for leasing a restaurant online at this link or by clicking below. 

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Topics: Leasing a Restaurant

Selling a Restaurant?  A Quick Guide to Restaurant Valuation

Posted by Robin Gagnon on Jun 7, 2019 5:26:59 PM

If you’re selling a restaurant, the number one thing to get right is the pricing.  How do you arrive at valuation? At one time, novice restaurant brokers often tried to use sales to value a business. This pricing technique was largely abandoned in favor of income valuation. If you plan on selling a restaurant business, your broker should know how to calculate its value using this methodology.

 

How It Works

Income valuation determines the benefit to a future owner by calculating the restaurant's discretionary income. It works well regardless of the specific business type. For example, you may use it to find the value of a pizzeria, pub or Mexican restaurant.

Several financial figures are needed to calculate the fiscal benefit that a restaurant for sale provides. You can find them on the seller's tax return and profit/loss report. The bottom line is that a high discretionary income normally yields a higher selling price.

Importance

Restaurant brokers should possess thorough knowledge of this method and understand how to perform the necessary calculations. This is true because lenders depend on income valuation to determine if they should supply financing on a restaurant for sale. An SBA-affiliated bank will expect sufficient discretionary income as well as a 20 percent down payment.

Knowledgeable buyers also employ this assessment when comparing restaurants and determining how much money they ought to offer. They can avoid taking excessive risks by selecting eateries with desirable valuations. This strategy helps them choose businesses that represent wise investments.

The Calculation

It's not hard to learn how to calculate a restaurant's discretionary income. To get started, enter the net earnings. Add owner-benefiting expenses like the seller's family's health insurance, vehicle costs and salaries. Next, you should add loan interest as well as all expenses that aren't paid in cash. These costs include amortization and depreciation.

The resulting figure is the discretionary income, also known as the "owner benefit." To find the business value and a suitable selling price, you'll need to multiply this number. Separately multiply it by both 2.5 and three to calculate the estimated price range.

Business Potential

Some agents and buyers spend a lot of time discussing the "potential" of a restaurant to achieve greater success. It might have numerous seats, new equipment or a high traffic count. While it makes sense to choose a location with the capacity for growth or improvement, this concept shouldn't affect the establishment's price. If you’re selling a restaurant, you don’t get the benefit of the new buyer’s work to improve the business. 

Sellers ought to be paid for their business development contributions rather than the building or location's potential. When buying a restaurant, you should benefit from your ability to cut expenses or attract more customers, not the former owner. Buyers and agents mustn't allow business potential to cloud their judgment and inflate prices.

Variations

Many factors can cause businesses to sell at the low or high end of the above-mentioned range. For instance, a popular franchise or top-notch bookkeeping may help a restaurant sell at three times the discretionary income. Some kinds of restaurants demand higher prices during certain seasons.

On the other hand, an establishment might only be worth 2.5 times its owner benefit if the area has too many similar restaurants. Don't forget to request a pricing explanation from the restaurant broker; ask about the information and methods used to determine the price.

Avoid brokers who cannot explain their pricing techniques when selling a restaurant.  The International Business Broker Association certifies knowledgeable brokers as a Certified Business Intermediary.  A professional with a finance degree or work experience in the finance sector may also possess a thorough understanding of effective pricing methods.

The income valuation technique offers a reliable way to take the guesswork out of restaurant pricing. Selling a restaurant is a math problem with a correct answer.  A strong broker will be able to provide you with the appropriate valuation.

 

Best Restaurants for Sale - May of 2019

Posted by Robin Gagnon on Jun 3, 2019 9:33:15 AM

The month of May, 2019 has ended, and with it, the list of the best restaurants for sale is now available.  We Sell Restaurants tracks the most popular and thus, best restaurants for sale based on the online inquiries, the signed confidentiality agreements, traffic to our Certified Restaurant Brokers and phone calls to our corporate offices. 

With restaurants ranging from coast to coast and hundreds in our database to choose from, narrowing the range to the top ten is no easy task.  Here's what we found to be the best restaurants for sale, based on customer traffic, for this month. 

First on the list was a restaurant for sale in Boca Raton which is ready to convert to nearly any concept.  The ideal location in Florida home to no state income tax and a booming economy, drove the looks, likes, calls and inquiries.  Offered by Restaurant Broker, Ken Eisenband, it's listed at just $55,900 and is sure to find an owner quickly. 

Listing ID:6650 Restaurant Broker Ken Eisenband    
Restaurant for Sale in Boca Raton, Florida - Can Convert to any Concept
Lease: Expires May 31, 2020; Option 5 years
Monthly Rent: $4688.73
Inside Sq. Ft. 1497
Outside Sq. Ft. 0

Price:$55,900
City:Boca Raton

Ken Eisenband
(561) 350-3365

The second best restaurant for sale for the month, generating strong traffic and inquiries is a two-store franchise group in Metro Atlanta.  Two units with strong sales and earnings always generates traffic and these two franchises for sale were no exception.  The location, in Woodstock and Marietta Georgia, allows someone to leave the corporate world behind in taking over these open and operating locations. 
Listing ID:6647 Restaurant Broker Dominique Maddox    
2-Store Package! Franchises For Sale in Metro Atlanta - National Brand
Lease: Lease Expires July 2019 plus 5 year option |
Monthly Rent: $4361.01,4225.68,
Inside Sq. Ft. 1876,1880,
Outside Sq. Ft. 200

Price:$575,000
City:Woodstock | Marietta

Dominique Maddox
(404) 993-4448

Coming into the top ten at number three for the best restaurants for sale in May was a University of Texas location offered by Dave Duce, Franchise Partner for We Sell Restaurants in Austin Texas.  Any time you combine college town with restaurant location, you have a built in audience.  The opportunity on this one at just under $90,000 is sure to be snapped up quickly.
Listing ID:6626 Restaurant Broker Dave Duce    
Highly Visible Restaurant for Sale right next to University of Texas!
Lease: expires August 2020
Monthly Rent: $6750
Inside Sq. Ft. 2000
Outside Sq. Ft. 250

Price:$89,000
City:Austin

Dave Duce
(512) 773-5272

Already in contract, the fourth most popular and best restaurant for sale this month is going, going, gone.  The fully equipped location in gorgeous Ponte Vedra Florida is ideal for any concept.  The new owner will have a great business on the beach in Ponte Vedra when he finalizes the transaction on one of the best restaurants for sale this month. 
Listing ID:6175 Restaurant Broker Eric Gagnon    
Restaurant for sale in gorgeous Ponte Vedra Beach - Fully Equipped!
Lease: expires January 2019 with three 3 year extensions available
Monthly Rent: $2400
Inside Sq. Ft. 1100
Outside Sq. Ft.

Price:$99,000
City:Ponte Vedra Beach

Eric Gagnon
(404) 800-6700

The state of Florida features not only sandy beaches, no state income tax and a business friendly climate.  Maybe that's why so many of the best restaurants for sale last month were in this state.  A charming Naples cafe offered by Franchise Partner of We Sell Restaurants, Dave Whitcomb made it to the top five with low monthly rent and a small quaint cafe location in downtown. 
Listing ID:6631 Restaurant Broker Dave Whitcomb    
Acquire this Charming Cafe for Sale in Downtown Naples, FL
Lease: Expires May 14 2023
Monthly Rent: $1913.00,
Inside Sq. Ft. 1200,
Outside Sq. Ft. approximately 20-24 seats

Price:$179,000
City:Naples

Dave Whitcomb
(239) 300-5041

Office building cafe locations in metro markets are always on the list of the best restaurants for sale, especially since they traditionally feature very low rental rates and minimal operating hours.  For high rise buildings in major metro areas, these are often subsidized by the landlord in return for offering this amenity to their tenants.  A two-store package priced to move by Restaurant Broker Robin Gagnon made the top ten this month. 
Listing ID:6389 Restaurant Broker Robin Gagnon    
Two Office Building Cafe for Sale Units! Great Locations in Atlanta Metro.
Lease: Expires 2025
Monthly Rent: $3500
Inside Sq. Ft. 3617
Outside Sq. Ft.

Price:$169,995
City:Atlanta

Robin Gagnon
(404) 800-6700

More from the state of Florida where a Sports Bar for sale in Delray Beach caught the eye of many restaurant buyers.  A reasonable rent and ample outdoor space made this one of the best restaurants for sale this month.  
Listing ID:6525 Restaurant Broker Ken Eisenband    
Sports Bar for Sale in Delray Beach is Looking for New Owner
Lease: five years plus two five year option
Monthly Rent: $4873,
Inside Sq. Ft. 2250,
Outside Sq. Ft. 2000

Price:$249,000
City:Delray Beach

Ken Eisenband
(561) 350-3365

The best restaurants for sale would not be complete without Georgia appearing in the mix once again.  A fast casual wings and sandwich shop was driving views, clicks, calls and activities this month with Restaurant Broker Steve Weinbaum fielding many inquiries. 
Listing ID:6417 Restaurant Broker Steve Weinbaum    
Profitable Fast Casual Wings & Sandwich Restaurant for Sale in GA!
Lease: 2 1/2 Years left plus Option
Monthly Rent: $2190,
Inside Sq. Ft. 1300,
Outside Sq. Ft.

Price:$149,000
Steve Weinbaum 

(770) 714-4552

Florida dominated this month's report of the best restaurants for sale with a Plantation listing by Certified Restaurant Broker Rob Morrison getting strong interest   The fully equipped location he offers for sale is a small, easy to operate location at just 1,200 square feet and the monthly rent is under $3300. 
Listing ID:6479 Restaurant Broker Robert Morrison    
Fully Equipped Restaurant For Sale in Broward County, Florida - Can Convert
Lease: expires 2019 + two 5 year options
Monthly Rent: $3290
Inside Sq. Ft. 1200
Outside Sq. Ft. 0

Price:$89,000
City:Plantation

Robert Morrison
(917) 499-5137

Charlotte North Carolina made it into the best restaurants for sale list for the month.  Franchise Partner Justin Scotto's listing for a bakery cafe for sale in the Queen City had buyers buzzing for more information.  Offers are pending on this one so we expect to see it off the market before long.  Move quickly if you are interested in this location. 
Listing ID:6642 Restaurant Broker Justin Scotto    
Massive Bakery Cafe for Sale in Charlotte, NC - Keep as is or Bring Concept!
Lease: 10 year term with 5 year option
Monthly Rent: $7000
Inside Sq. Ft. 4183
Outside Sq. Ft. 150

Price:$145,000
City:Charlotte

Justin Scotto
(704) 609-4460

Overall, the best restaurants for sale this month were strongly focused on Florida.  That could be the focus in other markets on getting children through the school year and kicking off vacations.  There is a seasonality to the sales cycle depending on where the business is located.  Florida, with its strong second home and older residents, peaks differently than other markets. 

For more information on the best restaurants for sale or any other listings, visit our full inventory of more than 300 restaurants for sale online at the link below. 

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Topics: Buying a Restaurant

Best Five Tips for Due Diligence When Buying a Restaurant

Posted by Robin Gagnon on May 28, 2019 7:00:25 AM

If you're buying a restaurant for the first time you may be wondering what to do during that all important due diligence period.  It’s critical when buying a restaurant to go into this important time period prepared to get the best information for deciding. 

Here are the best five tips for due diligence that apply to buying a restaurant or any other business.

5 Tips for Due DiligenceBest Tip number one.  Understand the Due Diligence Dates

Before beginning your due diligence period, carefully review the agreement between you and the seller to confirm you understand critical dates and targets.  This includes:

When does due diligence begin?  For some contracts, this is as simple as a single date and reads, “Due Diligence commences on…”  For others, it may be tied to a specific action by the buyer and seller, i.e. Due Diligence commences upon delivery of the items shown on exhibit B of the document. It could be tied to the “effective date” of the contract, which refers to the date on which the last party signs and accepts the final offer making the Contract “bi-lateral” on all terms and conditions.  That could mean that a buyer could offer on the 10th, get countered by the seller on the 12th, have the seller sign on the 14th and then re-counter and finally acceptance by the buyer on the 15th.  That would make the fifteenth the effective date in this scenario.

It is also critical to know when due diligence ends. This leads back to the contract again, where you must know the end date of due diligence and how it is counted.  In some agreements, it’s based on calendar days and states there are “15 calendar days” of due diligence.  For others, the agreement may refer to “business days” which could refer to Monday through Friday depending on the state you are operating in. 

For other agreements, it’s clearly stated that due diligence ends at some stated time i.e. Due Diligence shall end at 5:00 PM on August 10th.  As a buyer, it is critical that you understand the start and end date of any due diligence period. Most sellers and brokers will honor any request to extend due diligence but work to meet the deadlines set by the contract for the best results.

Best Tip Number Two:  Know what you’re requesting and why

It is tempting to simply Google the term, “Due Diligence for buying a business” and then send a 45 item list to the broker.  It is also counterproductive to most deals.  Before you request items going into a due diligence period for buying a restaurant, it’s important to know what you want to confirm and then, pursue the items that make sense.  While you can ask for anything during the due diligence period when buying a restaurant, these are the main items you would want to confirm:

  • Sales. It’s a simple task to confirm sales.  This can be confirmed by requesting POS reports, franchise sales reports or sales tax filings.  In buying a restaurant, you want to confirm the revenue is the amount stated and it’s usually the easiest item to verify in due diligence.
  • Earnings are found on the profit and loss statement and the tax return.  Getting copies of these documents can confirm any earnings claims.
  • Condition of Equipment. Buying a restaurant includes buying equipment that has been in service for some time.  It is a good idea to have the major items inspected by a relevant technician.  It is very important to check the condition of any coolers, freezers and HVAC equipment. For restaurants, the ability to maintain temperatures and make sure expensive condensers and high cost items are operating properly will save you money down the road.

Best Tip Number Three:  Understand your Right to Terminate during Due Diligence and be clear about notice requirements.  A due diligence period, for most contracts, is very open and allows you to terminate an agreement for any reason at all.  Be certain that you understand how to give notice to terminate.  You don’t want to email the seller, only to learn the contract states that written notice (fax or snail mail) is the only acceptable format.  The last thing you want to do is miss a notice requirement and think you terminated when you didn’t. 

Best Tip Number Four:  Know what you should ask for (see tip number two) and what you shouldn’t request. Forget old school requests of the seller to “watch” the business as an employee or customer during a due diligence period.  This is an outdated means to confirm sales left over from a time before electronic records and 80% credit card transactions. 

Don’t request copies of every W2 as payroll records can easily be verified through the payroll service.  You don’t want the liability of 50 social security numbers on your own laptop.  Don’t request accounting records you don’t even understand like cash flow statements or depreciation statements.  You’re signaling to the broker and the seller that you’re a novice since neither are material to a new transaction. 

When buying a restaurant, most sellers and brokers are working hard to make sure you get whatever you’re requesting.  If you request profit and loss statements dating back five years, they will probably attempt to comply.  If you add in thirty other requests, you will unfortunately, spend a lot of time and effort looking at data that is immaterial to a transaction.  Traffic shifts, competitive changes and the business front in general is not a static point in time.

For buyers, it’s a good idea to focus on the same time frame a bank would review for SBA lending.  That includes the two most recent years of tax returns and the most recent YTD profit and loss.  This is the store of the trending you want to understand.  Where were sales two years ago versus now? How are costs being managed?  What about labor lines?  It’s certainly possible to request far too much and end up in analysis paralysis where you simply have too many data points and too much information to easily analyze it.

Best Tip Number Five: Rely on knowledgeable resources.   If you use the services of an accountant, be sure they are someone familiar with the industry.  If your attorney did your estate planning, he’s probably not the right resource for buying a restaurant. Ask your broker for a list of options and interview them by phone to assemble a team to assist in the process.

Overall, the time period for due diligence is one of the most important aspects of any agreement for buying a restaurant.  Understand these important tips to make sure your time is spent wisely, and you have the resources to confirm this important decision.

 

Topics: Buying a Restaurant

Buying a Franchise Restaurant -- Five Things to Know

Posted by Robin Gagnon on May 20, 2019 6:13:25 PM

Trying to decide between buying a franchise restaurant or going it alone?  Here are five things that may influence your decision to start from the ground up or invest in an opportunity backed by a brand.  There are both advantages and disadvantages to buying a franchise restaurant.  Let's review five benefits. 

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The first advantage of buying a franchise restaurant is the brand name.  That concept is going to be well known to others and that alone, can drive customers and traffic versus starting something on your own.

The second advantage of buying a franchise restaurant is the ability to finance it easily.   For most franchise resales, like the ones offered at We Sell Restaurants, the existing cash flow, plus the brand name, make an opportunity easy to finance with just twenty percent down. The loan period of ten years makes the payback possible for the loan while you are making money from day one.

Another advantage of buying a franchise restaurant is the ability to pull from corporate resources.  From marketing to leasing, they have corporate team members with experience to assist you in making decisions. You don’t have to create advertising programs from the ground up as they will have them developed and ready to plug and play in your market.  That’s a serious advantage over a startup concept.

A well-developed supply chain with better negotiated rates is yet another reason to buy a franchise restaurant.  When you start from scratch, you’re a single unit with limited buying power.  Large chains negotiate strongly on behalf of all their members, improving prices and in some cases, even negotiating vendor incentives for all users.

Another overlooked advantage to buying a franchise restaurant in today’s tight labor market is the ease of training.  Applying corporate systems and training will get a new player off the ground quickly and easily.  Developing training on your own is both costly and time consuming. 

All of these reasons support an entrepreneur considering buying a franchise restaurant over a startup.   There are also disadvantages that anyone choosing one over the other should consider.  These include:

Starting a business based on someone else’s model will limit your ability to create, change or overall modify the menu, look or feel of the business.  If you can’t wait to start your business and make a menu change daily, buying a franchise restaurant is not for you.  You will be stifled by the control, required by the brand, to maintain consistent standards nationwide.

Costs can also be a consideration when buying a franchise restaurant.  The initial fee, along with royalty and marketing fees can cut into earnings quickly.  This has to be factored into your business plan.  Will the top line sales make up for the costs associated with each transaction?  Carefully study any Item 19, the financial representations of the brand, before deciding.

Lastly, you’ll have a large investment at the front end when buying a franchise restaurant.  You may believe you can build something of your own less expensively, but often, control over costs is lost in the excitement of build out and before you know it, the budget is blown.

Overall, buying a franchise restaurant is a decision that should be carefully considered with both the pros and cons weighed carefully.  Our inventory of franchise resale opportunities, features stores earning six figures on strong sales in some cases, and and others, where the sellers simply want to move on from the location. 

 

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Topics: Buying a Restaurant

We Sell Restaurants Annual Franchise Conference In Hammock Beach - Fun, Sun & Study

Posted by Robin Gagnon on May 17, 2019 5:13:20 PM

The We Sell Restaurants franchisees are headed home from Hammock Beach Resort, the location of this year’s franchise conference.  The theme, “Step Up Your Game” resonated among the enthusiastic and well-trained group.  As a growing and unique franchise brand, there was a mix of many new faces, along with veterans of the industry. Here are highlights from this year’s convention.

The core values of the We Sell Restaurants brand were a strong focus of discussions.  Each day kicked off with a review of the values including: 

  • We know Every Day is Game Day – We ACT Accordingly
  • We treat each other, customers and internal customers by the Golden Rule
  • We act with Integrity and only make agreements we are willing and able to keep
  • We are the Brand and are passionate about sales results.
  • We Create a Customer Service Experience Worth Sharing

Recognition of all the new franchisees occurred on day one including Jeff and Tawnie Marcus from Northern Colorado, Dave Whitcomb from Lee and Collier Counties, Florida, Michael Kelly from Long Island New York and Justin Scotto from Charlotte North Carolina and Rock Hill South Carolina.

The top producers for We Sell Restaurants were honored in both the million dollar and multi-million-dollar categories. 

  • Million Dollar club awards went to Bob Steinberger and Chris Gordon from the Denver Colorado office. Dave Duce, Franchise Partner from Austin Texas was also a million-dollar award winner.
  • Multi-Million Dollar awards went to Steve Weinbaum, a corporate broker and Ken Eisenband, Franchise Partner for Palm Beach and Broward County Florida.

The collaboration between the earlier franchisees and newest Certified Restaurant Brokers led to a great experience for all.  Conference attendees were exposed to role playing and communication on “Closing the Deal from Start to Finish” by partners of Atlanta Law Group; Patrick Norris and Ben Stidham.

Results from the We Sell Restaurants marketing programs and promotions took center stage on the first day along with Mystery Shopping results for both our own brokers and competing brands nationwide.

A team building event modeled after Iron Chef was held outdoors at the beachside resort with teams divided into Team Knife, Team Fork and Team Spoon.  The winning team, Team Knife, took home bragging rights plus special advertising upgrades on a national website. The Restaurant Brokers demonstrated their cooking chops with amazing dishes that had to include the special ingredient, octopus.  The finished products were not only beautiful but tasty and chef Ben from Vessel in Flagler Beach Florida and his wife Hailey were judges for the event. 

 

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The We Sell Restaurants new national referral program was in the spotlight on day two along with training on leases and E-2 visas.  Jessi1ca Weiss, attorney at law, shed light on the E-2 visa clients she represents and the potential to expand the national brokerage practice with additional visa clients.  How many employees must a restaurant have to qualify for an E-2 visa?  What is a substantial investment?  We Sell Restaurants is up to date on all the answers. 

Jonathan Neville, partner at Arnall Golden Gregory Attorneys at Law in Atlanta, Georgia presented the aspects of the lease critical to business brokers.  His discussion focused on the elements of the lease that could pull down the value of the restaurant.  He gave pointers on items ranging from release of tenant and entity to the transaction to negotiating deal points when it comes to relocation, acceleration or forced removal clauses. 

The We Sell Restaurants conference would not be complete without a full download of all the improvements to the proprietary platform, the B.O.S.S. or Broker’s Operations and Sales System. Key improvements for the year were reviewed as well as discussion for new improvements for the future.

Overall, between the Iron Chef Event, impressive guest speakers and top producer awards, the franchisees left energized, excited and ready to Step Up their Game.

Sponsors for this year’s convention included:  AmTrust Financial, Bloom Insurance and Atlanta Law Group.  For more information about the We Sell Restaurants franchise, visit wsrfranchise.com online

Topics: Buying a Restaurant

We Sell Restaurants Attends IBBA – Eric Gagnon Honored as Fellow

Posted by Robin Gagnon on May 14, 2019 8:55:11 AM

We Sell Restaurants founders Robin and Eric Gagnon recently returned from the International Business Brokers Association (IBBA) meeting in Orlando Florida. 

The event theme, “The Big Ideas Event:  Embracing Change on Main Street” was a busy few days packed with exhibits, knowledge sharing and recognition from their peers.

For the first time, We Sell Restaurants exhibited on the main floor.  The message to brokers attending the event, was that the Restaurant Brokers are ready, willing and able to handle restaurants for sale where other agents struggle.  For most brokers, failing to specialize in the restaurant for sale arena puts them at a serious disadvantage for making a deal come together.  The reasons are two-fold, either a lack of expertise or because they don’t have a large buyer database

IBBA

The We Sell Restaurants message to these brokers is to deliver a successful outcome for their sellers by referring the lead to a specialist.  “You don’t have to be great at selling restaurants, because we are” was the theme of the program.  The We Sell Restaurants referral program was a highlight of the international gathering of business brokers as the message resonated.  The booth was packed with activity. The We Sell Restaurants franchise was also highlighted for the brokers attending the conference, allowing them to sign up to become part of the nation’s most successful restaurant brokerage practice.

Eric Gagnon, President of We Sell Restaurants was honored at the annual meeting with the IBBEricA Fellow award.  The Fellow of the IBBA award was designed to celebrate the contributions of loyal, long-time members of the IBBA. This highly coveted and lifetime award is awarded to members who have their CBI designation and have met or exceeded the established criteria.

In order to be considered for the Fellow of the IBBA award, the individual must have been a member of the IBBA for ten years or longer, hold their CBI designation, be in good standing, and have made significant contributions to the association by serving as a director, committee chairperson, presenter or instructor at a conference, or various other association activities. Eric has been a member of IBBA for more than a decade and has participated in developing training for other brokers, served on committees and presented his knowledge many times.  The IBBA states that a Fellow must “in some way contributed much of their time and energy to serve the association for the betterment of the members.” Eric was also presented with a Top Producer Award for the IBBA for sales exceeding one million dollars.

Eric and Robin Gagnon teamed up for two mastermind sessions, providing their insight and expertise with other brokers on two topics.  Their first session, titled, Super Charge Your Practice with Technology was highly successful.  The two handled questions and presented tips for any broker trying to move administrative tasks to technology so that he or she could focus directly on buyers and sellers.

Their second maSuper Charge Your Practicestermind session, titled, “Reasons You Didn’t Get the Listings” included brand new brokers, seasoned veterans and participants from all parts of the country.  The two provided tips on closing deals and getting the deal signed.  The feedback from the crowd was that this team was delivering strong messages and backing it up with lots of experience.

 

After an action packed few days, the We Sell Restaurants team returned to the corporate headquarters, placed another trophy on the shelf and began handling the new lead referral pipeline.

If you are interested in learning more about We Sell Restaurants, visit our franchise page at wsrfranchise.com.

 

 

Topics: Buying a Restaurant

What You Need to Know About Buying a Restaurant

Posted by Robin Gagnon on May 6, 2019 10:46:00 AM

The value of a business when buying a restaurant can be calculated using the income valuation method.  Make sure your restaurant broker understands and relies upon this approach to valuation if you’re buying a restaurant.  

In the old days of pricing restaurants for sale, it wasn’t uncommon to see an inexperienced restaurant broker attempt to value a business based on sales. Those days are long gone, and your expert restaurant broker should be relying on the industry standard, Income Valuation to set pricing. 

What you need to know about buying a restaurant

This method calculates the total owner benefit derived from the business or Seller’s Discretionary Earnings (SDE).  This approach is the most trustworthy in generating consistent results across varied businesses (from a diner to a pizza restaurant for sale).   

Agents practicing restaurant brokerage for a living should be well informed and knowledgeable about this approach for several reasons.  First, financing sources rely on this method to set values for bank financing.  Verified earnings under the income valuation method and twenty percent down qualify for lending from SBA backed lenders.  For an individual buying a restaurant, using consistency of this method, allows them to manage their risk and gauge the correct offer price.  It also allow you to compare competing opportunities across a common scale.   

The Income Valuation Approach uses a restaurant’s profit and loss statement or P&L plus the tax return to look for all the owner benefit delivered by the business.  In turn, the higher the owner benefit (sometimes call Seller’s Discretionary Earnings or SDE), the more the seller will get for his bar or restaurant for sale. 

The math principle is straight forward and easily learned by those buying a restaurant.  Take net income and add back benefits to the owner (salary, insurance, auto or other) PLUS non-cash expenses like depreciation and amortization PLUS cost of debt service (interest) to get to Seller’s Discretionary Earnings (SDE) or owner benefit. 

It is not uncommon for inexperienced brokers or those buying a restaurant to rely on a store’s “potential.”  There’s nothing technically wrong with this if they are not valuing potential into the pricing.  That would be wrong.  A seller can only be compensated for his direct benefit.  If you are buying a restaurant and see opportunity to run a better operation, reduce food costs, save money on labor or otherwise improve the business to earn more, the benefit belongs to you.  It can’t be factored into the offering price for buying a restaurant. 

The point of calculating benefit is to get a true, not distorted, picture of current operations and current owner benefit to calculate pricing.  Any future potential included in the benefit distorts pricing and overprices the opportunity to the person buying a restaurant.                                                          

Once owner benefit is reached, the broker will use this as a multiplier to calculate the value of the restaurant.  Typically, restaurants for sale trade between 2.5 and 3 times owner benefit.  This large variance is based on any number of things that can positively or negatively affect the range.  If you are buying a restaurant with excellent books and records, it will trade at the higher end of the range.  A hot franchise concept may also trade higher.  Over saturated concepts may also trade at the lower end.

Seasonality can also affect the multiplier with sports bars trading down in summer months and higher in the fall.  You should ask any broker why and how they arrived at the pricing model to be certain they are relying on the best market data and trended information for buying a restaurant.

If a broker cannot share his strategy, comparable pricing and other factors affecting the price, find a better broker.  Pricing, when buying a restaurant, is not a guessing game but a definable model.  The best brokers with financial experience, degrees or holding the Certified Business Intermediary designation from the International Business Broker Association know and understand this methodology.

 Interested in seeing our restaurants for sale or learning more about buying a restaurant?  Visit us online.  

Click here to view all of our listings!

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Topics: Buying a Restaurant

Buying a Restaurant?  Check out the Best Restaurants for Sale April 2019

Posted by Robin Gagnon on May 3, 2019 7:31:53 AM

If you are buying a restaurant, odds are you've checked our website at WeSellRestaurants.com along with thousands of other buyers.  Website traffic increased 40.1% in April of 2019 leading to strong views of our best restaurants for sale.  We have ranked the most clicked on, called on, signed confidentiality agreements and overall most trafficked businesses to come up with our best restaurants for sale in the month of April, 2019.

Leading the pack for those buying a restaurant, was a three-store group of Papa John's Franchises for sale with high volume offered by Eric Gagnon.  The three units, offered in the southeast, shot straight to the top of our list that those buying a restaurant were clicking on, calling on and viewing on our site.

Listing ID:6762 Restaurant Broker Eric Gagnon    
Three Papa John's Franchises for Sale - Over 1.5 Million in Sales!
Lease: 09/01/2022, 12/31/2022, 07/31/2023
Monthly Rent: $1155,2128.34,1985.15,
Inside Sq. Ft. 1100,1100,1100,
Outside Sq. Ft.
Price:$469,000
Eric Gagnon
(404) 800-6704
A second generation restaurant space for lease is a hot commodity for those buying a restaurant.  The term refers to space that previously operated as a restaurant (its first generation) and remains equipped and ready to go for a new location or second generation. The second best restaurant for sale on our list was a unit offered in Austin Texas by Certified Restaurant Broker Dave Duce.
Listing ID:6738 Restaurant Broker Dave Duce    
Impressive 2nd Generation Space for sale in West AUSTIN!
Lease: expires May 2025
Monthly Rent: $20000,
Inside Sq. Ft. 4000,
Outside Sq. Ft. 1000

Price:$99,000

Dave Duce
(512) 773-5272

Another location in Austin Texas making the list of the best restaurants for sale at the very top, was a highly visible location right next to the University of Texas.  Buying a restaurant nearby a college campus gives those entering the industry or expanding their reach a build in client base who loves fast casual and the newest concepts.  We expect this on to sell quickly.
Listing ID:6626 Restaurant Broker Dave Duce    
Highly Visible Restaurant for Sale right next to University of Texas!
Lease: expires August 2020
Monthly Rent: $6750
Inside Sq. Ft. 2000
Outside Sq. Ft. 250

Price:$119,000
City:Austin

Dave Duce
(512) 773-5272

Those buying a restaurant converged on the best concepts that seemed ready for conversion or changeover to a new concept.  A location in Boca Raton Florida offered by Restaurant Broker Ken Eisenband at a very low priced $55,900 made it to the top five our our best restaurants for sale.  With a strong lease and multiple years plus option years remaining, this location is ready to a new concept.
Listing ID:6650 Restaurant Broker Ken Eisenband    
Restaurant for Sale in Boca Raton, Florida - Can Convert to any Concept
Lease: Expires May 31, 2020; Option 5 years
Monthly Rent: $4688.73
Inside Sq. Ft. 1497
Outside Sq. Ft. 0

Price:$55,900
City:Boca Raton

Ken Eisenband
(561) 350-3365

Alpharetta Georgia is a strong marketplace for those buying a restaurant. The northern portion of the thriving Atlanta market, this is home to very strong high income demographics with many families.  This offering by Restaurant Broker Steve Weinbaum garnered enough views, clicks and calls to make it onto the list of the best restaurants for sale in April 2019
Listing ID:6712 Restaurant Broker Steve Weinbaum    
Profitable Mediterranean Restaurant for Sale in Alpharetta, GA
Lease: 2 years remaining thru Feb 2021
Monthly Rent: $3000
Inside Sq. Ft. 1700
Outside Sq. Ft. 600+
Price:$99,000
City:Alpharetta
Steve Weinbaum
(770) 714-4552
Those buying a restaurant seemed strongly focused on developing new concepts based on the results we're seeing this month.  Another lease space, ready for conversion, made it onto the list of best restaurants for sale in April.  This Sunrise Florida listing drove strong activity and interest with an offer already drafted on this location.
Listing ID:6538 Restaurant Broker Ken Eisenband    
Restaurant for Lease in Sunrise, Florida – Publix Anchored Center
Lease: Negotiable
Monthly Rent: $4443
Inside Sq. Ft. 1400
Outside Sq. Ft.
Price:$0
City:Sunrise
Ken Eisenband
(561) 350-3365
Those buying a restaurant seemed to lean toward lower price offerings overall for the month, with listings under $100,000 getting strong views, offers and interest.  This one, offered by Ken Eisenband, Franchise Partner for Broward and Palm Beach county made it onto the top ten with a price point of just $75,000.
Listing ID:6477 Restaurant Broker Ken Eisenband    
Restaurant for Sale in Miramar, FL - after 32 years owner is retiring
Lease: five years plus five year option
Monthly Rent: $3259.52
Inside Sq. Ft. 1300
Outside Sq. Ft.
Price:$75,000
City:Miramar
Ken Eisenband
(561) 350-3365
A really low price offering in Humble Texas created strong clicks, calls and views.  The seller, who has an operator with health problems, has priced this one to go quickly.  Those buying a restaurant could not ask for a better priced opportunity for a franchise restaurant for sale doing more than half a million a year. We're expecting to wrap up an offer soon on this one.
Listing ID:6519 Restaurant Broker Robin Gagnon    
Franchise for Sale is Priced to Sell! Bring Your Offers
Lease: expires 11/30/2023
Monthly Rent: $5582.50
Inside Sq. Ft. 2100
Outside Sq. Ft.
Price:$15,000
City:Humble
Robin Gagnon
(404) 800-6700
Florida dominated the Best Restaurants for sale and our top ten list this month with another fast casual opportunity in Boca Raton.  This one featured below market rent and a right-sized location at only 850 square feet.  It also featured an outside patio, important to many of those buying a restaurant, to expand their footprint and allow for seating in the warm Florida weather.
Listing ID:6665 Restaurant Broker Ken Eisenband    
Fast Casual Restaurant for Sale in Boca Raton has Below Market Rent
Lease: Expires October 31, 2023
Monthly Rent: $1498
Inside Sq. Ft. 850
Outside Sq. Ft. 100
Price:$79,000
City:Boca Raton
Ken Eisenband
(561) 350-3365
Rounding out the best restaurants for sale for the month was a pizza franchise offered in Atlanta Georgia.  This location did not make it through the month without an offer and the partners buying this restaurant are already in training with the brand.  We're working to wrap this one up and transfer ownership quickly.
Listing ID:6613 Restaurant Broker Robin Gagnon    
Pizza Franchise for Sale in Metro Atlanta Market Ready for New Owner
Lease: 10 Years from 2014 with option to renew
Monthly Rent: $2916.66
Inside Sq. Ft. 1400
Outside Sq. Ft.
Price:$125,000
City:Atlanta
Robin Gagnon
(404) 800-6700

Overall, it was an incredibly busy month with website traffic spiking dramatically.  Those buying a restaurant seemed focused on low priced offerings for the month, signaling their ability to convert to new concepts with great ideas.  This included a strong set of views and calls on restaurant space for lease.

Tried and true performers still let the list however, with a three store Papa John's group taking the top spot.  Are you interested in buying a restaurant and looking for listings or resources?  Here's a link to our free guide to buying a restaurant.

Restaurants for Sale Near Me

 

Topics: Buying a Restaurant