Advice for Buying a Restaurant and Selling a Restaurant

We Sell Restaurants Recently Sold Terra Thai of Boulder, Colorado

Posted by Robin Gagnon on Aug 6, 2019 10:30:00 AM

We Sell Restaurants closes on another restaurant for sale transaction; the sale of Terra Thai in Boulder, Colorado

We Sell Restaurants is pleased to announce the sale of Terra Thai located at 1211 Broadway in Boulder Colorado. Usman Chughtai of Thornton, Colorado acquired the company from Karuna Wiwattanakantang. The transaction was handled by Franchise Partner and Certified Restaurant Broker, Jeff Marcus of We Sell Restaurants.terra thai

Terra Thai is a Restaurant on the hill of Boulder Colorado and one of the few that is close to the University of Colorado. This iconic concept is highly recommended by Yelp users who say, they have a “great selection of original hard-to-find Thai dishes.” This small jewel was sold from start to finish in just 49 days by We Sell Restaurants far outpacing the national average for days on market before selling a restaurant.

The seller, Karuna, said of his experience with Jeff Marcus, “It went quick and Jeff was very helpful, accommodating both seller and buyer.  It saved us time in negotiation and paperwork. Everything was clear and with his experience in (the) restaurant business, he knew my concerns and helped get the price right for both parties.”

Jeff Marcus is a Certified Restaurant Broker and the Franchise Partner for We Sell Restaurants in the state of Colorado and Wyoming. Jeff is a licensed by the Colorado Real Estate Commission as a Broker. Jeff has nearly 30 years of restaurant experience. Starting at an early age of 13 working in Chinese, Pizza, and high-end tablecloth concepts, Jeff has done it all and trained in every position in the industry.

Eric Gagnon, President of We Sell Restaurants, said of the transaction, “One of our newest Franchise Partners, Jeff Marcus, has shown significant sales results in a short period of time. We are looking forward to seeing his continued success in the future.”

More than 450 restaurants for sale can be found directly online at wesellrestaurants.com. We Sell Restaurants is the country's leading restaurant brokerage focused on those buying, selling or leasing a restaurant.

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 offers services in 45 states nationwide.

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Topics: Selling a Restaurant

Best Restaurants for Sale in July of 2019

Posted by Robin Gagnon on Aug 2, 2019 6:58:14 AM

The best restaurants for sale offered this month by We Sell Restaurants recorded had some of the highest views, calls and overall activity we've ever seen for an individual listing. 

Opportunities in Florida dominated the top three positions on the list for the month led by a Naples restaurant grossing $5.2 million which started a bidding war among interested parties.  The final outcome was a business that went far above asking price with multiple offers after spending just a few days on the market. This demonstrates the power of having a top tier business with excellent books and records and a verifiable performance.

We Sell Restaurants measures the best restaurants for sale by consolidating their views online, the direct outreach to our Certified Restaurant Brokers, signed confidentiality agreement and the inquiries from all our social media channels. 

Here's how the full list of the best restaurants for sale breaks out with our monthly top ten.This Naples Florida restaurant kicked off the most activity ever recorded in the shortest period of time and is in contract with multiple offers, including backup offers.

Listing ID:7004 Restaurant Broker Dave Whitcomb    
Naples Restaurant for Sale Grossing $5.2 MM - Owner Income 7 Figures!
Lease: expires June 30, 2021
Monthly Rent: $9941,
Inside Sq. Ft. 3774,
Outside Sq. Ft. seating for 25 on patio deck

Price:$1,000,000
City:Naples

Dave Whitcomb
(239) 300-5041

From a seven figure listing price to a low cost entry, another Florida restaurant for sale, offered by Certified Restaurant Broker Ken Eisenband in Coral Springs also hit the top of the chart. This fully equipped and inexpensive business is ready to convert into a new concept and is currently a fast casual format.
Listing ID:6849 Restaurant Broker Ken Eisenband    
Fast Casual Restaurant for Sale in Coral Springs – Fully Equipped
Lease: To be negotiated
Monthly Rent: $5620,
Inside Sq. Ft. 1400,
Outside Sq. Ft.

Price:$59,000
City:Coral Springs

Ken Eisenband
(561) 350-3365

Another low price entry, also in Florida, continued their domination on the chart this month.  This small business in Jupiter Florida is ideal for a change of concept.  A very low monthly rent of just $2124 makes this "starter" restaurant easy to operate and "right - sized" for a budding entrepreneur.
Listing ID:6997 Restaurant Broker Ken Eisenband    
Restaurant for Sale in Jupiter, Florida – Bring Your Own Concept
Lease: Expires April 2022
Monthly Rent: $2124,
Inside Sq. Ft. 1250,
Outside Sq. Ft.

Price:$80,000
City:Jupiter

Ken Eisenband
(561) 350-3365

Finally breaking out of the southern coast, an opportunity in the Atlanta Metro suburb of Suwanee Georgia generating six figures got a lot of looks and calls for the month.  Restaurant Broker Steve Weinbaum is representing this opportunity that has nearly six figures in cash flow and is selling for less than $100,000.  The business is 3300 square feet and the owner will train on the recipes and process for a new owner.
Listing ID:6428 Restaurant Broker Steve Weinbaum    
Earn Around SIX FIGURES in Suwanee GA, Priced Under $100,000
Lease: 3 years + 5 year option
Monthly Rent: $4000,
Inside Sq. Ft. 3300,
Outside Sq. Ft. n/a
Price:$95,000
City:Suwanee
Steve Weinbaum
(770) 714-4552
A multi-store opportunity in Charlotte North Carolina took one of the top positions for the month as the best restaurants for sale.  This two store package which includes two health focused franchises for sale offers very high earnings that exceed a quarter million a year!  That motivated our determined restaurant buyers to call, text, email and click on this great package which is still available.
Listing ID:6938 Restaurant Broker Justin Scotto    
Two Health-Centered Franchises For Sale, $288,000 Owner Benefit
Lease: 7 year term
Monthly Rent: $4646.40,4220.00,
Inside Sq. Ft. 1815,1060,
Outside Sq. Ft.

Price:$759,000
City:Charlotte

Justin Scotto
(704) 609-4460

From East to West, the best restaurant for sale opportunity west of the Mississippi was another multi-unit opportunity.  The three-store package, represented by Certified Restaurant Broker Jeff Marcus, has $3.5 million in sales on the books and six figure earnings.  That got the attention of many buyers reaching out for a reason to buy big cash flow.  SBA lending opportunity on this strong performer also made it a hit.
Listing ID:6742 Restaurant Broker Jeff Marcus    
Three Smashburger Franchises For Sale In Colorado - $3.5Million Sales!
Lease: Expires 02/28/2023
Monthly Rent: $7325.66,7596.91,12959.81,
Inside Sq. Ft. 2232,2214,2582,
Outside Sq. Ft.

Price:$599,000

Jeff Marcus
(970) 373-8205

Florida was back in the mix with a four store multi-unit package of franchises for sale in South Florida.  The units are in Delray Beach, Boca Raton, Boynton Beach and Lake Worth.  The Sunshine state, with no income tax and a business friendly environment to operate, attracts a lot of buyers from out of state for relocation.  This listing is still available and waiting for the right restaurant buyer.
Listing ID:6384 Restaurant Broker Ken Eisenband    
4-Store Package! Franchises For Sale in South Florida - National Brand
Lease: five years plus five year option
Monthly Rent: $5900,5900,3900,4500,
Inside Sq. Ft. 1539,1500,1450,1560,
Outside Sq. Ft. 300

Price:$850,000
City:Delray Beach | Boca Raton | Boynton Beach | Lake Worth

Ken Eisenband
(561) 350-3365

Austin Texas made the cut with some of the best restaurants for sale.  A business offered by Certified Restaurant Broker Dave Duce in Austin Texas made the phone ring and the website clicks come to life.  Restaurants for Sale in Austin have some of the shortest times on market in the entire We Sell Restaurants inventory and we expect this well priced opportunity to go into contract any day now.
Listing ID:6878 Restaurant Broker Dave Duce    
Gorgeous Restaurant available in Central Austin! Won't Last Long
Lease: expires March 2023 + 5 yr option
Monthly Rent: $8999,
Inside Sq. Ft. 2350,
Outside Sq. Ft. 500

Price:$114,000
City:Austin

Dave Duce
(512) 773-5272

A second Austin opportunity also made it onto the best restaurants for sale list.  This coffee shop, again, priced to move, demonstrated enough activity to push it ahead of 400 other listings to make the best restaurants for sale list for the month.  Downtown Austin is thriving and this location is sure to move quickly.
Listing ID:6284 Restaurant Broker Dave Duce    
Amazing Coffee Shop location available in Downtown Austin!
Lease: negotiable
Monthly Rent: $5500
Inside Sq. Ft. 1750
Outside Sq. Ft. 350

Price:$65,000
City: Austin

Dave Duce
(512) 773-5272

The final location on the list of the best restaurants for sale went back to Florida.This lunch and breakfast cafe near the ocean in Pompano Beach attracted those in the market to move south!  Franchise Partner and Certified Restaurant Broker Ken Eisenband is still accepting offers on this 2,160 square foot location that is fully equipped, open and operating and offered at very compeitive pricing.
Listing ID:6319 Restaurant Broker Ken Eisenband    
Lunch and Breakfast Cafe for Sale in Broward County - Near Ocean
Lease: Expires December 31, 2020 plus five year option
Monthly Rent: $5473.80
Inside Sq. Ft. 2160
Outside Sq. Ft. 500

Price:$140,000
City:Pompano Beach

Ken Eisenband
(561) 350-3365

That sums up the best restaurants for sale in a month that is traditionally slower for buyers due to summer vacations and less focus on business.  July 2019 broke the mold on that thinking and generated more buyer inquiries than normal for this time period.  

Florida remains red hot with temps in the 90's and restaurant locations that's can't be beaten but We Sell Restaurants has listings in more than 30 states nationwide online at our powerhouse website.  Click any of the links to listings above to see more.

Topics: Buying a Restaurant

Ken Eisenband of We Sell Restaurants Presents Seminar Selling Restaurants

Posted by Robin Gagnon on Jul 25, 2019 1:02:12 PM

Ken Eisenband, We Sell Restaurants Franchise Partner for Broward and Palm Beach county, recently presented a seminar titled, “Selling Restaurants 101” to the Business Brokers of Florida (BBF).

Ken's educational seminar was focused on helping other brokers understand the key metrics and items on the restaurant financial statement as they perform valuations or assist others in selling or buying a restaurant. He focused on key points such as, “what is the broker Selling?” along with a primer on the variables found on restaurant financial statements. He reviewed common ratios for cost of goods sold, labor costs and rent along with other expenses. The most important number, in his words, “Rent – you cannot fix a bad rent deal.”

KenEisenband reminded the group that other items on the profit and loss are controllable.  Food is in his words, “easily fixed by a new owner” and other expenses are “easily re-budgeted.”  Even labor, in Ken’s opinion is “easy to fix over time with new staffing, new pay structure or new scheduling parameters.”  Rent, however is a fixed cost that cannot be changed.

Ken also cautioned brokers on the practice of selling a restaurant that is doing a “cash business” stating that the owners have “lied to the IRS, lied to the Florida Department of Revenue, lied to their accountant, BUT, expect the buyer to trust everything they are told.”  Ken’s enlightening and entertaining presentation was attended by business brokers from across the state who are members of Business Brokers of Florida. 

The Business Brokers of Florida is a nonprofit association for business brokerage companies and their agents in the state.  The BBF association is the largest state business broker association in the country, and the second largest association of business brokers in the world.

The Business Brokers of Florida membership is restricted to those with experience in the industry or who attend specific training and have demonstrated knowledge in the industry.  They must establish this expertise when applying for membership.  Any member of the BBF is also held to a strict code of ethics, ensuring that buyers and sellers receive principled treatment in any transaction. 

Other members of the BBF include those supporting transactions such as attorneys, accountants, financial planners, appraisers and various financial institutions specializing in business loans. The association has more than 1,400 members and over 4,000 listings in their database. The Business Brokers of Florida currently has five districts within the state of Florida.

Ken Eisenband is the multi-unit Franchise Partner for Broward County and Palm Beach County Florida, the southern part of the Sunshine state. Ken leads two offices for We Sell Restaurants with distinction and directs a team of Restaurant Brokers as a multi-unit owner. Ken is a member of the Business Brokers of Florida Association where for numerous years, he received the prestigious Dealmaker Award as one of the top 5 transaction agents in the state of Florida as well as receiving the Million Dollar Club award.

Additionally, Ken is licensed by the Florida Real Estate Commission as a Broker and has also completed training leading to his designation as a Certified Restaurant Broker. Ken graduated with Honors from The School of Hospitality at Michigan State University in 1983 and has thirty years of experience in the restaurant industry.

For a look online at Ken's restaurant for sale listings, visit this link

Topics: Selling a Restaurant

Warning: Bars for Sale indicating "Cash" -- Do You Buy?

Posted by Robin Gagnon on Jul 15, 2019 2:29:48 PM

Bars for sale with cash on the books are promoting earnings that are usually not provable. With a bar, the term, “you get exactly what you pay for,” holds true. Pricing and earnings are difficult to prove resulting in the age-old struggle of how to set pricing on a "cash" business.

We Sell Restaurants would tell you that the only means to value a bar for sale company is based on earnings. Earnings are based on a profit and loss statement on the business and items that benefit the owner directly, called add backs. The sum of these are called Seller's Discretionary Earnings. This method, referred to as the Income Valuation Approach to valuation doesn't work when a bar owner states they have “cash earnings" they want to monetize in the sale.

warning_ bars for sale with _cash_

Buying a bar or pub for sale with verifiable earnings is the answer. The pricing may not seem as great a "bargain" as but if you are a buyer who favors a less risk adverse strategy, it’s the only way to go. Something advertised at a good price with "cash" earnings means there is simply no way to verify that number as a purchaser.

Since pricing is based on earnings that can be proven, any restaurant broker that takes some amount of funds done “off the books” will soon be overpricing the business. The only means by which the value would be right is if the earnings had been authenticated and the purchaser kept the company operating in the same manner he took over. That may mean running afoul of the law since potentially, earnings and revenue are misstated.

Another problem with a valuation that includes “cash” earnings is that the seller has already been overpaid on his unreported income. He (or she) got a huge benefit since he's avoided all the reasonable and customary taxes (state income tax, federal income taxation and more). Now he wants to sell that at a premium.

If the deal looks too good to be true, it likely is and that’s the case with “cash” off the books. Getting to the ideal price is critical. The seller of the bar or pub for sale has operated on a less than candid basis with his franchise (if he has one), the State Alcohol licensing jurisdiction, the state sales tax board and the Internal Revenue Service. It is a little stretch to now believe he or she is going to be forthright with you, as a buyer in an arm’s length transaction. Outside of coming to the business as a worker for a series of months, it is not possible to set up the "actual" earnings.

Trusting in transparency from a Seller that avoids certain tax requirements and doesn't report all his earnings is a difficult task. Should you convert the cash earnings onto the books, you're looking at an instant hit to earnings. The national, state, and sales tax implications alone could drive the operation to a negative earning scenario.

Brokers often promote these listings on the internet with caveats such as “cash to be shown by the seller.” Other restaurant brokers don't take these listings or simply offer them as asset sales since they can't be confirmed.

We Sell Restaurants has a simple recommendation when you buy a bar or pub. Pay for what you can see. Then you avoid the issue entirely and don’t overpay for earnings that never materialize on the back end.

Ready to see our bar for sale opportunities? Click the link below for the latest listings.

 

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Topics: Buying a Restaurant

Recently Sold Firehouse Subs of Fredericksburg

Posted by Robin Gagnon on Jul 15, 2019 11:30:00 AM

We Sell Restaurants closes on another restaurant for sale transaction; the resale of the Firehouse Subs franchise in Fredericksburg, Virginia

We Sell Restaurants is pleased to announce the sale of Firehouse Subs located at 1036 Warrenton Road in Fredericksburg, Virginia. Asif Siddique of Arlington, Virginia acquired the company from Sivasankar Beeravalli. The transaction was handled by Robin Gagnon of We Sell Restaurants.

download-1

Firehouse Subs was founded by two firefighter brothers that refer their growth as a “controlled burn” due to the numerous locations in our nation. Firehouse Subs is a nationwide brand with more than 1,000 units nationwide, including three in Fredericksburg, Virginia.

The buyer, Asif Siddique, is thrilled to be the newest franchisee owner in the Fredericksburg market with the Firehouse Subs brand. He shared his thoughts on the transaction saying that We Sell Restaurants provided, “extraordinary services during the closing of the business deal.” He went on to say, “You took (the) right amount of time to understand my business needs as well as guided me to the correct solution.  Your constructive attitude makes you the finest agent in the industry.”

Robin Gagnon is the Co-Founder of We Sell Restaurants and the firm's Chief Marketing Officer.  One of the most prolific restaurant brokers in the industry and a franchise resale specialist, she holds the Certified Business Intermediary (CBI) designation from the International Business Brokers Association or IBBA and is an MBA. She has been named a Certified Franchise Executive or CFE by the International Franchise Association and designated a National Industry Expert by Business Brokerage Press in Franchise Resales. 

Robin Gagnon said of the transaction, “It was my greatest pleasure to work with Asif on this transaction.  He set the standard for all my buyers to close on their deals.”  The Firehouse Subs brand is a strong prospect for resales with many of our buyers.  Their in-depth training and support make it a winning opportunity for those entering the food and beverage industry for the first time.

Other franchise restaurants for sale can be found directly online at wesellrestaurants.com. We Sell Restaurants is the country's leading restaurant brokerage focused on those buying, selling or leasing a restaurant.first time.

 

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 offers services in 45 states nationwide.

Find a Franchise-3

Topics: Buying a Restaurant, Restaurants for Sale, sold

Recently Sold Howard's Famous Corned Beef and Deli

Posted by Robin Gagnon on Jul 10, 2019 12:55:22 PM

We Sell Restaurants closes on another restaurant for sale transaction; the sale of the Howard's Famous Corned Beef and Deli in Boca Raton, Florida

We Sell Restaurants is pleased to announce the sale of Howard's Famous Corned Beef and Deli located at 3571 N. Federal Highway in Boca Raton, Florida. Sal Angrisani of Greenacers, Florida acquired the company from Howard Rich.  The transaction was handled by Ken Eisenband, Franchise Partner with We Sell Restaurants for Palm Beach and Broward Counties.  The location was sold after just 122 days on market. 

Howard's Famous Corned Beef and Deli is an outstanding location that’s been described as one of the most authentic delis in Boca Raton, Florida. The concept features signature corned beef that is cooked in-house as well as smoked salmon. They offer half pound sandwiches with their daily fresh breads. Howard's Famous Corned Beef and Deli also offers catering service and onsite beer and wine sales.

 

The seller, Howard Rich, said of his experience with Ken Eisenband, “I listed my restaurant for sale with Ken Eisenband and We Sell Restaurants. The process was very easy, and he brought in many prospects. Once we were in contract for sale, Ken was very organized and guided me through the entire process. I would definitely recommend Ken and We Sell Restaurants to anyone looking to sell their restaurant.”

Eric Gagnon, President of We Sell Restaurants said of the transaction, “Ken is an excellent Franchise Partner and one of the strongest players in the competitive business for sale marketplace in South Florida.  He is a consistent top producer for the brand and the state with excellent feedback from his clients.”

Ken Eisenband

Ken Eisenband is the multi-unit Franchise Partner for Broward County and Palm Beach County Florida, the southern part of the Sunshine state. Ken leads two offices for We Sell Restaurants with distinction and directs a team of Restaurant Brokers as a multi-unit owner. Ken is a member of the Business Brokers of Florida Association where for two consecutive years (2015 and 2016) he received the prestigious Dealmaker Award as one of the top 5 transaction agents in the state of Florida as well as receiving the Million Dollar Club award.

Ken graduated with Honors from The School of Hospitality at Michigan State University in 1983 and has thirty years of experience in the restaurant industry.  In 1996 Ken joined Ruby Tuesday’s finance team as an analyst working closely with the Real Estate department and Vice President of Operations on site selection and feasibility studies. Ken can be reached by phone at (561)-350-3365 or by email – ken@wesellrestaurants.com. His listings can be found online at wesellrestaurants.com.

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 https://www.wesellrestaurants.com, We Sell Restaurants operates in 45 states nationwide assisting those buying or selling a restaurant.   

 

 

Topics: Selling a Restaurant

Attention Restaurant Sellers.  Don’t Sign the Listing Until You Mystery Shop the Broker.

Posted by Robin Gagnon on Jul 6, 2019 11:56:16 AM

Two years ago, We Sell Restaurants embarked on a journey to confirm that our customer service standards were being met.  We achieved this through Mystery Shopping our Restaurant Brokers. We now highly encourage any restaurant seller to do the same.  Here’s why.

Quarterly, our restaurant brokers are shopped by “secret” buyers.  They never know which buyer inquiry it is, and they never know how they are chosen. They simply receive one of many inquiries on a restaurant for sale. Our corporate standard for follow up is that each buyer will be “touched” three times within the first three business days.  Why three times?  It shows genuine interest without putting undue pressure on the customer.  If the first message or contact is ignored, it lets the restaurant buyer know you will be professionally persistent without being annoying. 

Dont Sign - Until you SHOP

What’s a touch?  The first, most critical touch is by phone.  There are auto email responses on buyer inquiries, so we penalize the scores of brokers that email the buyer.  If a buyer has inquired through a national website, odds are any broker will have an automated response that says something like, “Thank you for inquiring on my restaurant for sale….”  In addition, the online listing site will also send an automated response..

Imagine that a buyer inquires on three listings.  They will easily get a total of six auto response emails (three from the site and three from the broker), without having spoken to anyone. Buyers are getting inundated with email but are not receiving a personal touch in the form of a phone call and actual discussion with a broker.   

We hired a research firm to develop the scoring mechanism.  An email outreach results in a negative score.  Failure to achieve three touches results in a negative score.  If the outreach occurs over six days instead of three business days, full points cannot be achieved.    

Overall, it’s simple.  Each broker is held to a standard for buyer contact by phone three times within the first three business days of their inquiry.  We compare each office and each broker to others as well as their last quarterly “shop.”  Lastly, we compare the income of the brokers with the highest Mystery Shopping scores to the income of restaurant brokers with the lowest scores.  What we found got their attention.  The brokers with the highest Mystery Shopping scores had the highest income and most sales.  Every. Single. Time.  The brokers with the lowest Mystery shopping scores correlated directly to the lowest income.  Every. Single. Time. 

What does this mean?  Restaurant brokers is a full contact sport.  You must touch and communicate with buyers in order to sell a listing. When we figure out how to sell restaurants with total automation and through email, then brokers are no longer needed.

So why must Restaurant Sellers perform this exercise for themselves?  After a year of quarterly shops, we decided to shop our competitors in year two.  That’s right.  In every single market, nationwide, we knew our performance, but what about the person we’re competing with for the listing.  What did we find? 

Brokers have forgotten to use the telephone.  They don’t realize it has a function other than to send and receive email.  In markets nationwide, in dozens of mystery shopping scenarios with competitors, our “buyers” did not receive one single phone call from other brokers. It is almost unbelievable, but the results are clear and scientific.  We gave them an email address, a phone number that rang to an area code in their market and an inquiry.  We did not get a single response outside of email. 

I recently sat through a software presentation built for business brokers and the entire focus was to build a chain of emails to respond to the buyer.  That’s fine for marketing and brand recognition but for sales, a personal phone call is still required. 

If another broker offers to sell your business for less, consider what that means.  If they do not call buyers and try to put deals together, it doesn’t matter how much they market or what else they do.  Emails do not sell restaurants.  Brokers do.  Don’t sign my listing agreement or anyone else’s until you make a buyer inquiry and see what happens.

When I call you three times in three days, I deserve the listing. 

Robin Blog Update

Topics: Selling a Restaurant

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