Advice for Buying a Restaurant and Selling a Restaurant

5 Reasons Franchise Resales Should be Outsourced to a Specialist

Posted by Robin Gagnon on Mar 7, 2019 10:07:38 AM

Franchise restaurants, as well as all franchisors, experience a natural phenomenon known as turnover.  As part of the natural life cycle of the brand, some units will become available for sale.  The typical reasons for selling are common to virtually every brand.  For some, it’s burnout or a different expectation for the actual life of the franchisees versus what he or she expected.  For others, it’s a partnership issue which could include a divorce or marital split or simply two partners that no longer have the same goals.  For others, it may be the evolution toward retirement and life after work. In any case, a franchise resale occurs when the current owner of a unit, for one reason or another, opts to sell the store before his original franchise term is over.5 Reasons to not handle Franchise Resales

Does that mean something is “broken” in the brand?  No. In fact, it is healthy and appropriate to see a rate of around 5% to 7% in franchise restaurant resales for a mature concept. There are even higher rates quoted in the industry.  The International Franchise Association suggests on their site, franchise.org that the number could be as high as ten percent.  No matter the rate, the important thing for franchise brands to know, when they are facing resales, is that this task is best left to a specialist.  Here are the top five reasons why We Sell Restaurants would tell you to seek outside help for franchise restaurant resales.

When the franchise restaurant resales surface, it’s important to choose a path that results in a good outcome for both the franchisor and the franchisee. Here’s why we believe there are five reasons you never, ever want to handle your franchise restaurant resales.

Reason 1:  Your Development Team has a Totally Different Focus

Those selling new franchises have a totally different skillset and focus than those buying new development opportunities. The financing requirements are different. The cost structure to buy and staff is different than for building from scratch. Most brands that go down this path segregate their team between new sales and franchise resales for a reason.  Resales are very time consuming, with many moving parts.  It’s outside the normal business practice and process, thus costing more effort and training with your team.  

Reason 2:  The Customer is Different for Resales versus new Sales

The customer buying a franchise restaurant is very different from those willing to build from the ground up.  The Franchise Resale customer has a much lower risk tolerance and a much higher need for security and ability to conduct due diligence on the numbers. He or she will need much more hand holding and materials from the seller.  Asking your development team to simultaneously handle new franchise sales and franchise resales is putting them at a disadvantage.

Reason 3:  Ask Your Lawyer.

Your Legal Team will tell you to never handle Franchise Restaurant Resales.  In the process of re-selling units, there will be a need for a valuation.  Do your team members have the expertise to provide that valuation?  The difference in even a few thousand dollars could easily benefit one person over the other.  Where does your loyalty lie?  Is it with the established franchisor who has been a loyal customer for many years or the new guy that you want to be sure doesn’t overpay or become over-extended?    

Item 19 or Financial Disclosures made in the FDD are not applicable to franchise resales so someone without the expertise and benefit of a strong financial background in your development team could expose your brand to major liability in the process of disclosing numbers.  Who is sourcing those numbers and what’s your liability for sharing them?  If they turn out to be flawed or there is a legal issue, will the buyer go after the individual unit owner or you, as a franchise brand?

Are you charging a fee for your services?  Before Franchise Resales are handled internally, as your legal counsel for an opinion.  We believe he will tell you to steer clear of these transactions and bring in an independent third party for franchise resales.  

Reason 4:  Franchise Leads are Expensive

It is no surprise that there is great competition for those seeking to buy a restaurant franchise or any type of brand.  By outsourcing this important role, your lead Acquisition can focus on new stores without the expense going to Franchise resales

The requirement to generate leads is a costly proposition.  Those leads and the advertising is very different for the two different customers, one seeking an established business, versus one seeking a proven opportunity.  Let an outside resource commit their dollars to resales while you focus the dollars on one lead funnel with one set of costs.

Reason 5:  You Aren’t licensed

Another reason for a brand to avoid franchise resales is the requirement for licensing.  Reach an agreement with a firm like We Sell Restaurants with the proper licensing in all the states where it is required.  The last thing you want to do is open yourself up both regulatory issues with the sixteen or so states that require a license.  In some states it is a misdemeanor to practice business brokerage without a license.  In others, like Florida for example, it’s a felony.

That’s not the only reason.  If you have an unhappy buyer or seller, you just opened the door for a lawsuit if they don’t like the outcome of the deal and you’re practicing without a license. 

If you are running a successful franchise program, our advice is to stick with what you do best.  Avoid the issues with franchise resales by contacting an independent third-party specialist like ours.  We build programs to eliminate the risks for the franchise and integrate to their practices for resales. 

Consider these five reasons to avoid internal resales and understand why they should never be part of your focus.

Looking for a franchise resales specialist?  Contact We Sell Restaurants or visit www.wesellrestaurants.com for more information.

Topics: Restaurants for Sale, Selling a Restaurant

Attending the IFA Conference

Posted by Steve Weinbaum on Mar 4, 2019 10:35:00 AM

I recently had the privilege and benefit of attending my first IFA conference in Las Vegas this past week.  First and foremost, my sincere congratulations and thanks to everyone at the IFA who were involved in putting together such a first-class event.  The content, guest speakers, vendor-supplier representation, and the round tables were all incredible. Each presentation was headed by passionate and knowledgeable industry leaders in the Franchising arena.

I had some great one-on-one meetings and attended several round table discussions, where the topic dealt specifically with resells and succession planning. The two overwhelming themes that came up throughout were that many franchise organizations had not anticipated the natural evolution of franchisees who were ready to sell their business and they were not prepared, or equipped, to handle them. ifa logo +

A seasoned franchise is accustomed to franchisees exiting, for a variety of reasons, and it has become the natural evolution of the business.  Some Franchisees get into the business and realize, relatively quickly, it’s not right for them.  Others are wildly successful, build significant equity in their business, and reach a point in their lives when where they want to retire and secure that equity they have built by selling their franchise(s).  Other franchisees experience life events that require them to find a new owner for their franchise. Then you have the owners who, for reasons unknown, are not realizing their full potential and decide to cut their losses.  

Regardless of the reason, when a franchisee decides it’s time to sell, It creates a secondary market for existing franchises. This event accounts for somewhere between 4-7%. Though the question remains; What is the best way to address them?

While this may sound a bit self-serving, Business Brokers were their number one “go to.”  Two main reasons for this approach repeatedly surfaced.  The first, was not having the resources and manpower to handle resells. Second, was to keep the Franchisor’s focus on finding new business versus recycling existing business.  Addressing these two “needs” is where Business Brokers are essential.

In the Restaurant space, whether Fast Casual, QSR, Treat, Bar, or Full Service, We Sell Restaurants can provide the resources and client-reach to address these objectives.  The resell buyer looks very different from the new franchisee.  There may be more risk adverse; meaning they want to purchase a business with a history of revenue and cash flow.  They may have different financial access; meaning the resources required to acquire a resell may be less stringent than that of a new build out. 

Our marketing and client focus is targeted at resell buyers. By pointing your existing Franchisees toward Business Brokers, it keeps them separate from new Franchisee acquisition.  Regarding resources, We Sell Restaurants is a Full-Service National Restaurant Brokerage that helps value and market the business, acquire and prequalify interested buyers, secure lending, negotiate lease terms, and work very closely with the Franchisor on approval and onboarding. This allows Franchisor to focus on their core business model.

If you are a Franchisor in the restaurant space looking for assistance in this complex arena, I am happy to help you navigate the somewhat complex waters of the restaurant industry.

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Topics: Restaurant Brokers, Franchise

International Franchise Convention – We Sell Restaurants Founders Report

Posted by Robin Gagnon on Mar 1, 2019 10:48:04 AM

The doors have closed, and the franchise brands have all headed home.  What did the highlights of the annual convention bring all of those in the industry together this year?  Restaurant Brokers Eric and Robin Gagnon attended from We Sell Restaurants along with Steve Weinbaum from the Atlanta office.

The high point of the opening session had to be the words of Gary Vaynerchuck or “Gary V”, the keynote speaker.  He challenged franchise restaurant brands to see the disruption occurring in the industry and move media dollars out of traditional methods like TV and into digital channels like Facebook and Instagram.  He noted that the attention of the end consumer is shifting and there is an enormous opportunity to leverage dollars.  His advice to the brands – make $1.00 spend like $10.00 instead of spending $10.00 in precious dollars only to have it return $1.00. 

Gary V

For this marketing guru who grew a $3 million dollar wine store and built it to $60 million before launching his own digital media company, it’s all about contextual creative that gets to the heart of the ultimate end user.  In his words, the number way to win – “Build an actual brand” and the volume of creative is imperative. He reminds restaurant franchise owners and all franchisors to have the discipline to create and get in front of the consumer with contextual creative.

What’s the restaurant of the future according to this visionary?  It may be a commissary with no brick and mortar that builds an incredible online brand presence and delivers 100% of its product through services like GrubHub or EZ Cater.  As a franchise restaurant owner, does that strike fear in your heart?  It should as it suggests that just like taxi cabs and car services who never dreamed of Uber and Lyft, a restaurant franchise can be replaced with an online brand. 

Eric FGB

Eric Gagnon, President of We Sell Restaurants, picked up power tools to work at a local school as many brands embraced Franchising Gives Back. The work of this team, at an elementary school in Las Vegas will send children back to school with smiles and renovated playgrounds and classrooms.

Franchising Gives Back is a national commitment by the International Franchise Association to band together in communities across the nation and share with those in need.  

Robin Gagnon is a member of the Women’s Franchise Committee and the sub-committee that produces the Annual Leadership Conference.  This year, Nick Friedman, co-founder of College Hunks Hauling Junk, led the program focused on culture.  As he reminded the audience, it’s not what’s on the walls; it’s what’s in the halls.  He terms a brand’s culture,  the “immune system” of the business.

The strong focus of this brand on core values instills the culture at all levels of the organization.  He also reminded the group of more than 300 that you must balance the “Sesame Street” approach to a fun workplace with the “Wall Street” demands in order to have a result based organization.  In his words, “With no margin; there’s no mission”.  He told franchise restaurant brands to repeat the values often for these to permeate the brand.  Does it work? For College Hunks Hauling Junk, the focus on culture has paid tremendous dividends in building one of Inc Magazine’s Fast Growing Companies.

A legislative update to the Women’s Franchise Committee suggested that the $15 minimum wage is probably going to pass on the House floor though the strong legislative arm of the IFA suggests it will probably fail in the Senate, leaving that bill, like many , at an impasse in today’s political climate.  The impact of this wage law on independent and franchise restaurants where we have seen this implemented has resulted in loss of jobs, cut backs in hours and overall loss in restaurant count.

Robin IFA Robin Gagnon, co-founder of We Sell Restaurants, moderated a panel with Google’s Maresa Freidman and NetSearch’s Mike Myers.  The presentation was titled, “Online Search in a Digital world, will you be left behind or lost online?” Key Takeaways from the session dovetailed with the keynote speaker as the Google team emphasized that an increase in connectivity is dramatically changing search.  The other key takeaway was a reference to today’s newly empowered consumer. 

Google’s advice to the restaurant franchise world and all brands was simple.  Be there, be valuable and be quick.  They estimate there were 8 billion devices connected worldwide in 2017 and by 2020, they expect that number to hit 20 billion. Time spent online in 2019 every single day is estimated to be 6.9 hours. 

Measure every moment was another piece of advice offered by Google.  It’s no longer about the final point before a customer buys but every interaction in a series of touches with your brand that gets them to the point of purchase. 

Eric Gagnon, President and Co-Founder of We Sell Restaurants, moderated a panel that included both franchise restaurants and other national brands.  His session, titled, “Building, Maintaining and Growing Positive Relationships with Your Franchisees,” was also moderated by Andrew Bleiman, Managing Attorney with Marks & Klein, LLP.  The participants ranged from emerging franchise restaurant brands with less than 50 units to powerhouse franchisors with 500 or more stores.  The sharing between these groups made the business roundtable format a win all the way around.

Robin Gagnon moderated a Business Solutions roundtable on the Topic of “How to Make a Good Franchise Great.”  Participants also ranged from entry level players to those with units in the thousands.  Key takeaways around communication included a suggestion to put Franchise Units together on a What’s Up App to share knowledge in a quick hit.  Those who report up to a Franchise Business Consultant with a range of approximately 20 – 30 units can use this tip for instant communication and connection.

 In addition to the great events above, the sessions were packed with restaurant franchise brands and other segments of the industry.  The closing session of IFA saw the installation of Dave Barr as the new incoming IFA President.  The action packed days passed in a blur but strong networking and great exposure to ideas is what the International Franchise Association Conference is all about.  Stay tuned to our blog for an update from Steve Weinbaum, Certified Restaurant Broker who also attended the packed event.

 

Topics: Restaurant Brokers

Where is the best place to Buy a Restaurant?

Posted by Robin Gagnon on Feb 25, 2019 2:53:33 PM

We Sell Restaurants weighs in on the Best Place in America to buy a restaurant.  You might be surprised by the answer!

A recent article suggests that those in the market to open a restaurant look at what they term as “second-tier” or “third-tier” cities.  We Sell Restaurants has been advocating a similar approach for those in the market to buy a restaurant for several years.

What’s a “second-tier” city?  Think about cities that don’t host an NFL team like New York, Chicago or Los Angeles.  Instead consider towns like Ann Arbor Michigan which ranked second on the list. Other cities that hit the top ten in this recent publication included Arlington Virginia (but not D.C.) and Scottsdale Arizona.  What’s the benefit for owners to buy a restaurant in Ann Arbor or Arlington versus Detroit or D.C? 

One key difference between so-called “second tier” cities and the most populous markets in America is rent. A Where is the best place to buy a restaurant_key component to success in the industry is strong control over occupancy costs.  The top cities in the nation have what some would term exorbitant rent levels, making it virtually impossible for a restaurant to operate at a profit. 

As Restaurant Brokers, we counsel our clients to manage total occupancy which includes their base rent, plus cost of common area maintenance, taxes and insurance at a maximum of ten percent.  While that’s an ideal level, we find most major cities make that an impossibility. 

Consider an example in Atlanta Georgia where we see rates for base rent hitting the $35 to $40 per square foot mark for a basic shopping center space (no end-cap, small patio).  Taxes, common area charges, insurance and other costs push that total occupancy rate up to $50 per square foot.

At a level of fifty dollars per square foot, a simple fast casual concept in a 1500 square foot location would need to generate sales volume of $700,000 per year to hit the ten percent occupancy mark on a rent bill for the year of $70,000 or $5833 per month.

Is that attainable?  For most restaurateurs, it is not.  An operator must be at the top of their game to push that type of volume and pay the rent level requested in major markets.

Another reason to focus your search to buy a restaurant in less populated markets is the ability to stand out in the mix.  For major league cities there is heavy duty competition.  Virtually every concept you can think of has been developed multiple times.  You won’t be one of five fast casual sandwich shops, you will be one of fifty.  For the middle market landscape, you can carve a niche and get returning customers, a much less expensive prospect than constantly having to attract new ones among steep competition.

Buy a restaurant in a second or third tier like Plano Texas versus nearby Dallas.  You’re reap the benefits from limited competition and loyal customers.  This especially comes into play with catering or delivery service, a large component of the sandwich shop business.  The Uber Eats, DoorDash, GrubHubs of the world will offer unlimited choices in a large city.  For the smaller market, you’ll be one of a few instead of lost in the mix.

A final reason to focus on the second and third tier locations when you buy a restaurant is the cost of living.  Not only will you reduce your own operating costs for basic needs like insurance and labor, but your customers also benefit.  The cost of living will almost always, be lower than in the “major league” cities.  With less money paid out for taxes, mortgage payments, insurance and all the other expenses associated with these markets, your customers have more disposable income to spend.  Where do they like to spend those funds?  Dining out is top of mind along with entertainment for free cash flow.  That’s good news if you are buying a restaurant in a city like Birmingham Alabama or Bellevue, Washington (number eight on the list).

That also means your own money will go further.  You may be living in a rat race environment now where you need high six figures to support your lifestyle.  Move to a smaller market and $85,000 may “spend” like $120,000 if your overall cost of living is reduced.

Your family also benefits in ways that can’t be measured in dollars and cents when you buy a restaurant outside a major market.   Smaller communities often mean a better overall quality of life.  You may not be able to afford a home on the water in New York, but you can get all the views you want in Pensacola Florida.  Your family will get access to great school systems, a family friendly environment and a sense of community that will spill over from your status as the local restaurant owner.

The original survey of where to open a restaurant was based on research and analysis from the online equipment seller Bid-on-Equipment.  They keyed into four attributes when ranking the best place to open a restaurant:  Per capita spending on restaurants; the number of restaurants per capita; the number of restaurant workers available per capita; and the median income of residents.

“Cities with growing restaurant scenes, like Austin, Nashville, and Denver, show why aspiring restaurant owners might not want to rule out second- and third-tier cities,” Bid-on-Equipment noted in presenting the data.

We agree.  Our feedback on where to buy a restaurant looks at cost to operate, cost of living and quality of life.  By whatever measure you choose; don’t discount smaller markets too quickly.   They may be just what you’re looking for when you consider the overall picture and your desire to buy a restaurant.

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Topics: Buying a Restaurant

Top Ten Restaurants for Sale in January - We Sell Restaurants

Posted by Robin Gagnon on Feb 1, 2019 5:21:47 PM

The month of January was off the chart with activity, signed confidentiality agreements and buyers seeking new locations.  Forget the government shutdown, our buyers didn't stop for a second.  Lots of deals went into contract and to the closing table. 

What were the most popular restaurants for sale this month?  The warm beaches of Delray Beach and Sunrise Florida rose to the top as our buyers looked south in the face of the big chill.  We gauge the hottest listings by the number of signed confidentiality agreements, phone and text activity as well as inquiries from online websites.  Here's the list ranked from highest to lowest. 

Three of the top five restaurants for sale were in sunny south Florida.  The number one listing for the month was a sports bar in Delray Beach.  Priced to move at $249,000, this has a long-term lease with reasonable rent.  Our buyers are still considering whether to place an offer on this one. 

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. 2259
Outside Sq. Ft. 2000

Price:$249,000
City:Delray Beach

Ken Eisenband
(561) 350-3365

The second most popular listing was also in Florida.  This was a restaurant space for lease offered by Ken Eisenband in our south Florida office.  The easily managed space is only 1,400 square feet and with monthly rent at just $4445, this one is a great opportunity for those ready to do their own concept. 

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

One of our most popular restaurant for sale types is always an office cafeteria. We call this, "the restaurant business with banker's hours."  This hot new listing by Steve Weinbaum offers six figure earnings on limited hours.  That combination of high earnings with no nights or weekends had buyers calling, texting and signing up online for more information.  

Listing ID:6542 Restaurant Broker Steve Weinbaum    
Highly Profitable Office Cafe - Atlanta - Limited Hours Earning Six Figures!
Lease: 2+ years remain plus 3-year option to renew
Monthly Rent: $0
Inside Sq. Ft. 2013
Outside Sq. Ft. n/a

Price:$295,000
City:Atlanta

Steve Weinbaum
(770) 714-4552

Ken Eisenband's team in South Florida continued to dominate the top ten with a Food Court Restaurant for sale.  This location, which is just around 1000 square feet is profitable and easy to operate.  It's no wonder it was causing the phone to ring!
Listing ID:6497 Restaurant Broker Ken Eisenband    
Restaurant for Sale in Food Court South Florida
Lease: Expires April 30, 2019 - Negotiable Option
Monthly Rent: $4500
Inside Sq. Ft. 1050
Outside Sq. Ft.

Price:$125,000

Ken Eisenband
(561) 350-3365

Another new listing - a cafe for sale in Alpharetta had Eric Gagnon fielding multiple calls and offers.  The North Fulton market features high income households amidst a thriving retail environment.  Offered at just $125,000, this cafe for sale got not only phone calls and looks but multiple offers in the first few days on market. 
Listing ID:6447 Restaurant Broker Eric Gagnon    
Cafe for Sale in Alpharetta doing $55,000 a Month in Sales! Winner!
Lease: Valid thru 2022, plus 2 - 5-year options
Monthly Rent: $5500
Inside Sq. Ft. 2700
Outside Sq. Ft.

Price:$125,000
City:Alpharetta

Eric Gagnon
(404) 800-6704

Restaurant buyers with a sweet tooth were all about this donut shop for sale in Colorado.  A landlord ready to extend the lease and a entry level price point had a lot of buyers reaching out to Colorado Restaurant Broker Bob Steinberger on a deal.
Listing ID:6226 Restaurant Broker Bob Steinberger    
Profitable Donut Shop for Sale In Colorado Springs is Priced to Sell!
Lease: 3 years left - landlord will extend.
Monthly Rent: $2037
Inside Sq. Ft. 1900
Outside Sq. Ft. 200

Price:$20,000
City:Colorado Springs

Bob Steinberger
(303) 901-4938

Minnesota might have gotten the frozen temperatures but buyers were red hot this month.  A three store package of franchises for sale with sales over $1.4 Million brought Scott Ruby into the mix for the month.  Priced to move, these stores are ready for a new owner today! 
Listing ID:6423 Restaurant Broker Scott Ruby    
Three Sandwich Franchises for Sale in Minnesota - Sales over $1.4 Million!
Lease: Dec 2019 2 Options | March 2021 2 Options | May 2022
Monthly Rent: $5375 | 3554 | 4947
Inside Sq. Ft. 1586 | 1360 | 1262
Outside Sq. Ft. 6 seats | 6 seats | 0 seats
Price:$150,000
Scott Ruby
(612) 352-8718

Overall, the month was jumping with activity and the top ten restaurants for sale got more looks, click, calls and confidentiality agreements than we have seen in recent time!  The cold didn't stop these red hot deals from moving forward.  What's in the future?  We see continued strong interest in the market.  Many deals are closing on restaurants for sale with the temporary life on the government shutdown and SBA lending back in full force. 

Want more information on these restaurants for sale or access to our latest listing?  Follow this link.  

Topics: Buying a Restaurant

Buying a Restaurant?  Avoid these Landlord Hazards

Posted by Bob Steinberger on Jan 24, 2019 4:08:59 PM

Buying a restaurant and owning your own business can be an extremely rewarding and lucrative investment.  Most Buyers are surprised to know that often, it is really, not that expensive.  There are restaurants out there selling for $30,000, $20,000 or even less.  Some vacant restaurants are even listed for free!

What the Buyer must understand is that coming up with the money [in most cases for restaurants this inexpensive, it needs to be CASH] is one thing.  However, qualifying to sign or assume the lease with the landlord is another thing entirely and something you need to understand very well.

Landlords are a different animal and not your friend.  Once you reach an agreement with the Seller for buying a restaurant, you still will have to make a deal with the landlord.  They are under no obligation to accept you as a tenant regardless of whether the restaurant’s Seller has accepted your offer. landlord hazards to avoid (1)

Any and all offers you make for buying a restaurant should have a ‘’lease contingency’’ meaning if the landlord will not approve you, you can walk away from the deal and get your earnest money quickly returned.  You need to be very careful how the language in the offer contract reads in that regard. Consult your Certified Restaurant Broker and an attorney for advice on this language.

In the case of almost any lease, the landlord will require what is called a ‘’Personnel Guarantee’’ That is a critical point that is important for you to understand.  What it means is, that if your business fails, you can not get out of the lease by simply bankrupting your Inc. or LLC.  You are PERSONALLY on the hook for the remainder of the lease.  That mean to landlord can look for your personal savings, home equity, 401K, autos and personal belongings to satisfy the terms of the lease.

Some leases also contain a ‘’acceleration’’ clause.  Make sure you understand this.  What that means is that if you default on the lease, say, by missing a month or two rent, then you not only owe that back rent, but you may owe the entire value of the lease due and payable immediately!  So, say your lease’s rent is $6000 per month and you have four years remaining on it; you could possibly be liable for $288,000 plus late fees, plus attorney costs! 

Oh, and by the way, any friends or relatives who have cosigned the lease are in the same unfortunate hook as you are and if they are wealthier expect the landlord to pursue them more vigorously than they do you.  It can make family Thanksgiving or other gatherings very uncomfortable.

When buying a restaurant with an accepted offer, you have taken the first step.  Landlord approval is the next.  Most landlords will seek the following information from someone buying a restaurant.

  • A personal financial statement showing the Buyer’s assets, liabilities and net worth.
  • 2 years of personal tax returns
  • Buyer’s credit score
  • A professional resume

You only get one chance to make a first impression with a landlord.  If you have any problem with providing the above in a fast, serious, comprehensive detail – DO NOT MAKE AN OFFER ON THE BUSINESS.  You are simply not ready for buying a restaurant that has landlord involvement.

If you are ready – get this info together now.  Look at it and ask yourself ‘’If I was a landlord would I accept this person as a tenant?’’  Most landlords will require you to have a net worth of, at least, two years the value of the lease [again, if rent is $6000 per month that would mean $144,000 in total net worth.

So, the take-away is, if you are interested in buying a very inexpensive restaurant, it can certainly be done but there are much more considerations than the simple asking price from the Seller. Many of the challenges lie with the landlord. Consult your Certified Restaurant Broker or your attorney for assistance.  In the market for buying a restaurant?  Visit our restaurant for sale listings online at this link.

 

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Topics: Buying a Restaurant

The We Sell Restaurants Checklist for Selling Your Restaurant

Posted by Robin Gagnon on Jan 21, 2019 2:47:18 PM

Selling your Restaurant may mean putting some materials together first.  Here’s a checklist of what most Restaurant Brokers will need to make sure you put your best foot forward!  There are limited buyers for the best restaurants for sale so be sure they get the best impression of your business.

It’s all in the name.  Selling your restaurant won’t happen without both the legal name of the selling entity and the business name (including the store number if it’s a franchise location).  Make sure your Restaurant Broker also knows what type of structure you operate your business under, whether it’s an LLC, C-corporation or Sole Proprietorship.  Expect an experienced broker to check the status of your legal entity with the Secretary of State before listing.  A corporation that’s defunct will keep a transaction from moving forward.

If you are selling your restaurant franchise, you have some extra items to pull together including:Checklist-1

  • Remaining number of years on the franchise agreement
  • Royalty percentage
  • Marketing Fee percentage
  • Transfer fee amount
  • Franchise training time period and understanding of whether this occurs before or after closing.
  • Date of any required refresh or remodel of the store and estimated cost.
  • Copy of the franchise agreement.

Do you have to tell your brand you are selling?  Most franchise agreements state that you provide a “right of first refusal” and notification to the brand prior to listing.  In reality, most owners skip this step until and unless it’s placed in contract. You should be clear on the process for transfer and understand who in the corporate office will assist in approving the new buyer.

Make sure the restaurant broker knows how to reach you including your cellphone, email address and any other information to provide up to the minute results on listing activity.

For the store itself, be prepared to provide information on employees (the number of full time and part time), a sample schedule and rates of pay.  For the business, buyers and restaurant brokers want to know the operating hours, how long it’s been established and how long you, as the seller have owned it.  They will also need to know the number of seats both inside the business as well as patio seating. 

Infrastructure is key to selling your restaurant and a key component of what you are transferring.  Make sure you understand the size of your hood and grease trap along with the age and condition of any heavy equipment like the HVAC system, coolers or freezers.

 Selling a restaurant may seem intrusive in some regards.  Buyers definitely want to know your reason for the sale.  Be prepared with a response on why you are selling your restaurant whether it’s burnout, retirement, relocation or simply a change in lifestyle.   

When it comes to the lease, buyers want to see a physical copy.  Either scan your original or ask your landlord for an electronic copy.  They will want to understand the escalations as well as any option years.  When quoting the rent, make sure you include Rent plus CAMS, taxes and insurance.  Your restaurant broker will also need contact information for your landlord as well.

It is critical that you provide up to date financial information when selling your restaurant.  Buyers are looking at the cash flow to make a purchase decision.  For lending, that means two years of tax returns plus the current year profit and loss statement.

Decide up front, when selling your restaurant, exactly what will transfer.  Will your famous cookie recipe be included or not?  What about the picture of your family over the fireplace?  If something is not included, pull it from the restaurant so you don’t have to explain that choice to buyers.

Lastly, do some local research and figure out key economic factors that make this a winning location or opportunity for someone one. 

Selling your restaurant is easy if you follow this simple checklist and provide your restaurant broker all the information he or she needs.  You can download our restaurant selling checklist at this link or contact us to sell your restaurant at this one.

 

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Topics: Selling a Restaurant

Restaurant Brokerage Firm We Sell Restaurants Expands to New Markets

Posted by Robin Gagnon on Jan 17, 2019 5:49:53 PM

Franchise Development Agreements signed to Expand Presence in Colorado & Wyoming

We Sell Restaurants, the nation’s leading restaurant brokerage franchise brand, announced today the expansion of its operations with new franchisees in Colorado and Wyoming.  This growth in the West is announced just a month after signing two other franchise development agreements for Charlotte North Carolina and Naples Florida.

A rise in franchise development is driven by the brand’s ongoing growth strategy and overall success in the industry.  This achievement, coupled with their proprietary software platform for business brokerage, the Broker’s Operations and Sales System or BOSS, has drawn experienced restaurant operators as well as those outside the industry, to join the growing company.

The expansion in Colorado and entry to Wyoming will be spearheaded by new franchisees Jeff and Tawnie Marcus.  They have signed an agreement to launch their location in Northern Colorado with Boulder as a base and extend their operations into Wyoming. The practice will launch in early February 2019.

The Marcus team has an unmatched passion for the restaurant industry and have owned and operated nearly a dozen restaurants since 1991. Their concepts ranged from breakfast and lunch and family diners to full service restaurants with complete bars, nightclubs and more. As owners of a family diner, they were awarded Marketers of the Year in 2007 for the National Independent Restaurant Association and were named "Best Casual" Restaurant every year from 2006 thru 2011.

jt smaller“We chose We Sell Restaurants since it complements our experience and knowledge.  We’ve owned, and operated restaurants and also worked alongside restaurants in the online ordering and delivery aspect. We can’t think of a better way to stay engaged in the industry than as a Restaurant Broker for a premiere firm.  We Sell Restaurants has solid systems, training and flexibility. We are also highly confident in the well-rounded background and cross-industry experience of the founders. We see Northern Colorado as a thriving and dynamic restaurant industry currently underserved from a niche, exclusively restaurant, business broker perspective.”

With more restaurants for sale across 42 states than any other firm in the country, We Sell Restaurants is the restaurant brokerage leader in America.  The company is currently seeking single and multi-unit operators to join in the brand’s rapid expansion. For more information about franchise opportunities, visit wsrfranchise.com or call 1 888-814-8226.

About We Sell Restaurants

Launched in Atlanta, Georgia, We Sell Restaurants has spread nationwide and sells restaurants in over 40 states.  We Sell Restaurants is the nation’s leading business brokerage firm focused solely on the restaurant industry.  Founded in 2001, We Sell Restaurants has been providing professional specialized services for the industry with a strong focus on franchise resales for almost 20 years.  We Sell Restaurants offers the only Certified Restaurant Broker training in the nation, resulting in experienced, knowledgeable brokers with unmatched closing ratios. For more information, please visit www.wesellrestaurants.com

Topics: Selling a Restaurant

Top 10 Restaurants for Sale in December of 2018

Posted by Robin Gagnon on Dec 28, 2018 2:32:42 PM

The year has ended with a bang and lots of activity on restaurants for sale online at We Sell Restaurants.  The market was extremely busy despite the holiday time period with overall web traffic nearly doubling over the prior year.  That makes our top ten restaurants for sale even more impressive.  These rose to the top of hundreds of listings making them the most popular of all those for sale. 

How do we measure the best of the best?  We look at the signed confidentiality agreements online as well as outreach to our Certified Restaurant Brokers from texts, phone calls and emails. 

The most activity was generated on two pizza franchises for sale in Alabama that are selling for literally, pennies on the dollar.  The build out for these two stores was close to a million dollars but the sellers hit a snag in their partnership and they are ready to sell at just $99,000 for two open and operating locations.  We have a number of buyers looking at this deal and doubt it will stay in play much longer. 

Listing ID:6415  
Two Pizza Franchises for Sale in Alabama! Phenomenal Pricing!
Lease: Both lease terms expire 2030
Monthly Rent: $7995 I 7400
Inside Sq. Ft. 2793 I 2597
Outside Sq. Ft.

Price:$99,000
City:Huntsville | Madison

Robin Gagnon
(404) 800-6700

The second most popular of our restaurants for sale this year was a cute cafe in Alpharetta Georgia.  The home run location generating sales of $55,000 per month is priced to move at $125,000.   Bring your offer on this cafe as it won't last at this pricing. 
Listing ID:6447  
Cafe for Sale in Alpharetta doing $55,000 a Month in Sales! Winner!
Lease: Valid thru 2022, plus 2 - 5-year options
Monthly Rent: $5500
Inside Sq. Ft. 2700
Outside Sq. Ft.

Price:$125,000
City:Alpharetta

Eric Gagnon
(404) 800-6704

 Florida nudged into the top of the list with the third most popular of our restaurants for sale this month.  The Fort Lauderdale beauty is fully equipped with everything you need for virtually any cuisine.  The monthly rent of just $2163 is also driving buyers as this market is seeing price increases.  Smart buyers are looking at existing locations where they can take over the lease rate. 
Listing ID:6480  
Restaurant for Sale in Fort Lauderdale is Fully Equipped & Priced to Move!
Lease: five year
Monthly Rent: $2163
Inside Sq. Ft. 1440
Outside Sq. Ft. 0

Price:$49,000
City:Fort Lauderdale

Ken Eisenband
(561) 350-3365

Fort Lauderdale was also the source of strong activity from the next of our restaurants for sale on the list.  A low price listing at under $85,000 with another remarkable rent number fed buyer activity, online acknowledgement of confidentiality agreements, texts to our agents and strong phone calls. 
Listing ID:6444  
Restaurant for Sale in Ft. Lauderdale, FL - Catering, Pick-Up and Delivery!
Lease: Expires on September 30, 2022 plus 5 year option
Monthly Rent: $1450
Inside Sq. Ft. 725
Outside Sq. Ft.

Price:$84,900
City:Fort Lauderdale

Ken Eisenband
(561) 350-3365

Rounding out the top five restaurants for sale was a metro Atlanta franchise doing more than $1.5 million in sales.  The seller owns the building and is ready to work with a new tenant on lease terms.  You can't get much better than that!  This location in Rome Georgia is 7,500 square feet and has demonstrated very strong interest for the month. 
Listing ID:6495  
Franchise for Sale in Atlanta Metro - Over $1.5 MM in Sales
Lease: Open End - Seller is the owner of building and business
Monthly Rent: $15000
Inside Sq. Ft. 7,500
Outside Sq. Ft.

Price:$99,000

City:Rome

Eric Gagnon
(404) 800-6704

Those in the market to do their own location are hitting the website hard judging by the interest in this restaurant space for lease in Roswell.  The lease terms are open to negotiation and the endcap location couldn't be better for establishing a fast casual concept in a booming trade area.  Just 1600 square feet, bring your concepts today and we'll help you negotiate a deal on this listing. 
Listing ID:5079  
Restaurant for Lease in Roswell GA
Lease: To Be Negotiated
Monthly Rent: $3492.00
Inside Sq. Ft. 1600
Outside Sq. Ft.

Price:$0
City:Roswell

Steve Weinbaum
(770) 714-4552

Colorado jumped into the mix with the next business in the top ten.  This donut shop was one of the most popular restaurants for sale - based on low cost of entry, low rent and an easy to run operation. 
Listing ID:6226   
Profitable Donut Shop for Sale In Colorado Springs is Priced to Sell!
Lease: 3 years left - landlord will extend.
Monthly Rent: $2037
Inside Sq. Ft. 1900
Outside Sq. Ft. 200

Price:$20,000
City:Colorado Springs

Bob Steinberger
(303) 901-4938

Colorado made the next most popular space on the list with this BBQ restaurant for sale.  The Denver landmark is represented by Restaurant Broker Chris Gordon who has seen his phone, email, and contacts spike over activity for this location. 
Listing ID:6294  
BBQ Restaurant For Sale in Colorado - a Denver Staple and Landmark!
Lease: 10 year + 10 year option
Monthly Rent: $15,000
Inside Sq. Ft. 6,000
Outside Sq. Ft. 750
Price:$400,000
Chris Gordon
(303) 594-4247
 Atlanta was back in the mix, barely, with a second franchise for sale location.  The mall based store generating strong sales of half a million has a long lease and is an easy to operate concept in a small footprint.  
Listing ID:6217   
Mall-Based Franchise for Sale in Atlanta - Annual sales of Half a Million
Lease: remainder of 12 year lease expiring 2030
Monthly Rent: $10,464
Inside Sq. Ft. 700
Outside Sq. Ft. n/a

Price:$149,000
City:Atlanta

Steve Weinbaum
(770) 714-4552

Last on the top ten restaurants for sale list was a breakfast and lunch restaurant in Miramar Florida.  An owner that's retiring combined with a strong lease and loyal clientele makes this location a winner among our customers. 
Listing ID:6477  
Breakfast and Lunch Restaurant for Sale in Miramar, FL - Owner 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

That's the winning list of restaurants for sale that beat out hundreds of others to land on the top ten for the month.  Many of these restaurants for sale will be gone by next month as inventory continues to see strong turnover and a rapid selling cycle. 

Want to see more restaurants for sale?  Visit our full inventory online at this link

 

Topics: Restaurants for Sale

5 Reasons January is the best month to Sell a Restaurant

Posted by Robin Gagnon on Dec 20, 2018 10:52:40 AM

Exactly why is January the best month to sell a restaurant?  For the nearly twenty years that We Sell Restaurants has been marketing businesses, the first of the year signals an uptick in buyer interest.  That means December is the best time to list your restaurant for sale.  Here’s why, in this Restaurant Broker’s opinion.

Reason 1 – It’s the Economy….

The economy, despite a recently announced rise in interest rates is still pumping out the strongest GDP (Gross Domestic Product) in years.  The real GDP growth in second quarter was 4.2 percent, something unseen in a5 Reasons January is the best month to Sell a Restaurant (1) decade.  With this economic news, combined with a strong labor market and record unemployment, those working a job feel comfortable taking a risk.  If they step outside their current corporate comfort zone and paycheck to buy a restaurant, the market is always good enough to return.  That gives them more security to take the chance on a new venture. That’s reason one that January will be a great month to sell a restaurant.  Buyers will be home over Christmas vacation studying opportunities that look more interesting than returning to work.  

Reason 2 – Restaurants are Worth more

Year end numbers are in and 2018 was much better for most restaurant sellers than 2017.  For that reason, the value of the restaurant you want to sell has increased over the prior year.  This is based on national results published by Black Box Intelligence data.  “Same-store sales were up 1 percent in November, which became the sixth consecutive month of positive sales growth for the industry. Excluding a very small dip in same-store sales during May, every month since March has posted positive same-store sales growth. This represents a period of expansion not experienced by the industry in over three years.”  When sales go up, earnings go up, particularly after a tough 2017.  If you want to know what your restaurant is worth in today’s market, now’s the time to find out.

Reason 3 – 401K plans are still worth more

Despite recent turmoil and sell-offs with issues around Fed Reserve hikes and more, the market is still good.  Even after the current sell-off, for instance, the S&P 500 through 12/10 close was up by nearly 15 percent since President Trump’s inauguration and more than 21 percent since Election Day 2016. This gives those in the market to buy a restaurant confidence that their nest egg is secure.  They can leave corporate America, leverage 20% down on a purchase and have money to return to if everything fails.  That’s the third reason January will still represent a high point in placing restaurants in contract.

Reason 4 – Lenders are Ready to Go

Lending is at a level unmatched in this Restaurant Broker’s history.  Multiple banks are making more than one offer on the same deal.  With rates inching up, based on the latest Federal Reserve hike, money is still cheap but more importantly, it is readily available. Someone in the market to sell a restaurant, no longer must worry about holding a note on the deal.  He or she can expect a payout, in most instances, at the closing table if the books and records are strong and sometimes, even when they aren’t. If you want to sell a restaurant today, be ready for the market to continue to be hot in January. Buyers only must bring between ten and twenty percent to the table to get a loan in today’s very favorable loan market.  The recent interest rate hike is meaningless overall in the hit to a payment but will make lenders even more anxious to close more deals and earn more interest on them.

Reason 5 – Because we said so....

We have been selling more restaurants than anyone else nationwide for nearly twenty years.  We have watched the cadence of the market through thick and thin, boom and bust. In all instances, we see buyers flock to the latest listings in January.  That creates a spike in our web traffic, more inquiries online and more deals placed in contract. 

Overall, if you’re in the market to sell a restaurant, now is the time to list the business, before January hits and buyers start looking at all the restaurants for sale.  Contact one of the Restaurant Brokers to learn more about the process or visit our listings online at this link.

Blog Byline Robin

Topics: Selling a Restaurant