Advice for Buying a Restaurant and Selling a Restaurant

Robin Gagnon

Recent Posts

We Sell Restaurants Sells Firehouse Subs of Charlotte

Posted by Robin Gagnon on Jul 1, 2019 2:02:47 PM

We Sell Restaurants closes on another restaurant for sale transaction; the resale of the Firehouse Subs franchise in Charlotte, North Carolina

We Sell Restaurants is pleased to announce the sale of Firehouse Subs located at 4732 South Boulevard in Charlotte, North Carolina. Trung Nguyen of Charlotte, North Carolina acquired the company from Timothy Goss.  The transaction was handled by Justin Scotto of We Sell Restaurants.

Firehouse Subs, a fast-growing franchise chain with over 1,160 opened restaurants was founded by two firefighter brothers. Firehouse Subs is a nationwide brand with many locations in Charlotte, North Carolina.  The South Boulevard store in now under new ownership with the assistance of the We Sell Restaurants Franchise Partner in the market.   

The seller, Tim Goss, said of his experience with We Sell Restaurants and Franchise Partner, Justin Scotto, “Could not have asked for it to go any smoother.  Made the process easy to stay on track and complete as scheduled.”  The buyer is excited to be the newest franchisee in the Charlotte market for the Firehouse Subs brand.  He said, “Justin handled the deal with care and professionalism. He clearly laid out the timeline and what was needed to close the deal."

Justin-1

Justin Scotto is the multi-unit Franchise Partner in the Carolina's. A Certified Restaurant Broker, Justin has been in the restaurant industry for 20 years. Justin is a longtime veteran of the restaurant industry.  In recent years, Justin developed and operated 12 fast casual restaurants with Firehouse Subs from the ground up before pursuing a path of restaurant brokerage with We Sell Restaurants.

Eric Gagnon, President of We Sell Restaurants, had this to say of the transaction.  “Justin is one of our newest Franchise Partners and has shown strong results in the Charlotte market.  We look forward to his continued success.”

Franchise Partner Justin Scotto is a specialist in the restaurant sales industry. 

Justin is a graduate of the University of North Carolina at Chapel Hill.  He lives in the Charlotte Region and when he is not busy brokering restaurants, he enjoys family time with his wife and five children.

Justin is also a member of the Carolina's-Virginia Business Brokers Association. Justin can be reached by phone at (704) 609-4460 or by email – justin@wesellrestaurants.com.

 

Restaurant for sale listings can be found online at wesellrestaurants.com, the nation’s largest and most heavily trafficked marketplace for the sale of restaurants. 

We Sell Restaurants is the nation’s largest restaurant brokerage firm, specializing in restaurants for sale, restaurants for lease and franchise restaurant resales.  Found online at wesellrestaurants.com, We Sell Restaurants works in 45 states nationwide.

Sell your Restaurant

 

Topics: Franchise, sold

Three Lessons SBA Lenders Won’t Teach You When Buying a Restaurant

Posted by Robin Gagnon on Jun 24, 2019 1:48:53 PM

Are you in the market for buying a restaurant?  Are you looking at lending resources?  If you’re like a lot of buyers, it may be your first experience with SBA lending.  Don’t count on getting these lessons from your lending partner but trust We Sell Restaurants to fill in the blanks.

3 Lessons (2)

Lesson # 1:  The Seller Can Contribute to YOUR EQUITY when buying a Restaurant

If you are buying a restaurant and the SBA lender is looking for 20% down, some of that may come from the seller.  That means on a $300,000 purchase, you can put as little as ten percent down or $30,000 and have the seller hold a note for $30,000. The lending community views this as twenty percent equity combined between the two which meets the threshold for lending in most cases.

This is a great lesson in reserving your own cash when buying a restaurant with financing terms. It also keeps the seller engaged in the game with a little “skin” which never hurts when there is lending involved. It is referred to as a seller’s “hold-back” or “seller’s note” in banking language.

 

Lesson # 2:  A Seller note has to be on a Standby for Two Years

Don’t count on the lender to explain this up front and your broker may not be familiar with this requirement in many instances but this one is not negotiable.  If a seller lends money in the deal (see Lesson 1), then he or she may not receive a payment until 24 months and one day after the closing.

Why is this rule in place?  The bank wants to be sure you have maximum cash flow to succeed and make the payments BEFORE a payment goes to someone else.  The form of the payment can then conform to whatever terms you and the seller decide.  Want a lump sum at 24 months?  That’s not a problem.   

Interest can accrue on the balance (and should accrue at whatever rate you and the seller decide.  You can set the 24-month mark for monthly payments, lump sum, quarterly payments or whatever works between you and the seller.  The lender will have to examine the note and it will be part of the closing documents. The seller will also have to subordinate his interest in the furniture and fixtures to the bank.  That means any claim they have on the assets is superior to the seller’s lien or claim.

 

Lesson # 3:  SBA Rules can be Overcome

There are hard and fast rules for SBA lending but lesson three is that any requirement can be overcome or re-negotiated.  One requirement is that a second mortgage is always a requirement to secure SBA lending.  Not every time.  In a recent transaction with We Sell Restaurants, two well qualified individuals did not want to secure their note with real estate holdings.  In their case, the financials were strong enough and their net worth position was strong enough that the lender offered an alternative.  They were allowed to deposit a fixed amount of money in an interest-bearing account with the lender for a two-year period.  When the two years ended, they would get a full refund of the amount.

In other cases, we have seen lenders overcome issues like:

  • Felony convictions
  • Credit scores of spouses
  • Bankruptcies

The bottom line to this lesson is that if you don’t ask, you won’t get.  Be open to negotiate the terms of a deal and make sure your restaurant broker works to represent you in the matter.

Here’s what you learned from today’s article.  First, you’re not on your own to raise the down payment.  The seller’s hold back or note can be part of the equity or down payment in the deal.  Secondly, a seller note has to be on a two year standby, meaning he can receive no payments for 24 months.  Lastly, despite what you may hear, there are some rules that can be overcome or renegotiated.

If you’re buying a restaurant with lending, use these lessons to minimize your down payment with input from the seller and negotiate terms that work for you as a buyer.

 

For more information on lending resources or buying a restaurant, visit these links:

Restaurants for sale with lending

 

For more information on lending, Download our Free Guide to Lending at this link. 

Topics: Financing a Restaurant

5 Deadly Mistakes to Avoid in Selling Your Restaurant

Posted by Robin Gagnon on Jun 18, 2019 8:55:00 AM

Selling your restaurant is not easy.  Here are five deadly mistakes to avoid for greater success.  We Sell Restaurants has been selling restaurants for twenty years.  Our best advice follows.

5 deadly mistakes

Deadly Mistake 1:  Choosing a Broker based on the cheapest rate

It’s human nature to look for the most cost effective means to accomplish anything.  That may mean seeking a low cost provider when selling your restaurant.  Why is this a mistake?  The person who is charging the lease amount of money often has the lowest investment in marketing, the least number of buyers in their database and the lowest potential for selling your restaurant.  You would not engage with a POS provider who gave you a 1% lower rate if in fact, your credit card machine wouldn’t operate during peak hours.  Why would you engage with a business broker based on the lowest cost?

The other issues with selling your restaurant with the cheapest resource is that you may be dealing with a novice in the in industry.  There are many costs that come into play when selling your restaurant. Many of these can easily cause items to “leak” from the cash you take away from the closing table.  Negotiating the security deposit which landlords are notoriously slow to hand back is one element.  If your broker does not secure your interest in this property up front, you could potentially save $4,000 in commission and give up $7,000 in security deposit.  The same is true for inventory or cash on hand in the safe or tills.  Those items must be negotiated and the “newbie” who does it for less may simply not negotiate the devil in the details that adds up to thousands of dollars in lost cash for you on the settlement statement.

One of the costliest mistakes that someone who is the “cheapest” may make on your behalf is simply negotiating a weak letter of intent or LOI without the proper structure of a full Asset Purchase Agreement.  This not only leads to the issues cited above with loss to the seller of reimbursable expenses but often leads to a seller engaging with an attorney which can result in thousands of dollars in fees before a deal is even done.  The adage to avoid being “penny wise and pound foolish” comes into play when selling your restaurant.  The “cheap” choice can be very costly.

Deadly Mistake 2:  Pricing above market

The second costly mistake for sellers is going out above the recommended pricing level.  It seems harmless as you simply list “higher” and see what comes in the door.  Today’s consumers for buying a restaurant are more informed, have great financial skills and are savvier than ever before.  If the restaurant for sale is priced above market, you’ll lose countless days while it garners no interest before you adjust the pricing to the reasonable level.

Deadly Mistake 3: Taking Your eye off the Ball

A third deadly mistake when selling your restaurant is assuming that the buyer will pick up the slack and taking your eye off the ball. There’s never a more important time to stay fully engaged in the business and make sure it’s running at its full potential.

Buyers won’t purchase the future potential.  They are purchasing the current performance.  Be careful that you don’t become complacent or start generating sales drops once you’re listed, since after all, you’re out the door before long.  When selling your restaurant, the bank, the buyer and the broker are looking for comparable store sales to stay at or above last year.  Failing to do so is a deadly mistake that will impact your eventual selling price.

Deadly Mistake 4:  Saying “no” to a deal

This is perhaps the worst of the deadliest mistakes when selling your restaurant.  There are always three options when presented with an offer.  Yes, is one option and it’s generally not the first response.  No is the second option which is a deadly mistake.  The last option is the appropriate one – a counter.  When a buyer is engaged enough to make an offer, no matter what the offer, it’s time to swallow your pride and come back with a counteroffer.  The most important part of the negotiation is to keep the would be buyer engaged.  A flat out “no” leads to a buyer that must then, negotiate against himself and most will simply bow out.

Sellers that refuse to counter and simply respond “no” are acting out of emotion.  These are the same sellers that return to We Sell Restaurants later and say, “Can you call that guy and see if he’s still interested.”  We get one bite at the apple in negotiations.  If you simply say no and go back later to negotiation, you are in a severely weakened position.  No matter what the offer is; it’s a good strategy to look for some positive in it and counter the buyer.

Deadly Mistake 5:  Going to market without good financial data

The last deadly mistake is going to market without good financial data.  When buyers are interested, time is money.  If you don’t have your past year books and records in order or if you don’t have the ability to provide electronic documents, get ready to lose deals.

You must have your financial house in order and be ready for due diligence.  Time kills deals and introduces doubt.  While we are waiting on due diligence materials, the buyers are getting cold feet by the minute.  Don’t make this deadly mistake.  Have your records ready to go.

In twenty years of selling restaurants just like yours, these are the five most deadly mistakes we’ve seen.  Don’t fall victim to them.  Prepare up front and contact a broker today for success in selling your restaurant.

Want our free downloadable checklist on selling your restaurant?  Click the link below.

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Topics: 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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Robin Gagnon bio

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.

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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
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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