Advice for Buying a Restaurant and Selling a Restaurant

Selling a Restaurant? 5 Pieces of Advice to get to “Sold”

Posted by Robin Gagnon on Apr 21, 2017 9:13:11 AM

Selling a restaurant can be easier than you think if you follow these five pieces of advice.   

Establish Trust with Your Restaurant Broker

It is critical when selling a restaurant to establish a relationship of trust between you and your restaurant broker.  The relationship between the Broker and Seller must be one of complete honesty.  We heavily advocate the “No Surprises” policy.  Pull out all the dirty laundry and make sure your broker is aware of every liability.  You may think you’re the only restaurant with a liquor license citation, a tax lien in the hundreds of thousands, a sexual harassment lawsuit by the waitresshandshake-2056023_960_720.jpges or back rent of $35,000 but trust us when we say, the experienced restaurant broker has seen it all before. 

You’ve hired his or her knowledge because they know how to work through the issues, resolve them and keep this deal managed through to the closing table.  The worst mistake you can make as a seller is to hide anything from the broker.  The only thing he can’t deal with is something he’s not aware of.  Remember, no surprises.   

Establish a Communication Strategy

Secondly, make sure you ask the broker how they  communicate with you.  Some brokers have highly standardized systems that enter Buyer notes and automatically send you an email when someone communicates with the broker on your listing.  Our system does that.  Others simply call when there’s significant activity.  Still other brokers aren’t great at communicating the status of the listing at all. If you want ongoing updates and that’s important to you, set the expectation with your broker early.  If you only want to hear from him when he’s got a deal, share that too.  Brokers that specialize in the restaurant business know the hours.  They don’t call anyone at 8am since they know you work late nights.  They also don’t call you between 11:30 and 1:30 if you operate a lunch business.  They never call you at the restaurant since they don’t want to open up a confidentiality issue or if they do, they leave a message using their first name only. Tell your broker what you want to hear and when you want to know.  

Understand the Listing Agreement

The relationship between a seller and his broker is formalized through a listing agreement. This is a contractual obligation.  Make sure there are no misunderstandings about what you are selling and who is authorized to sign so that offers move quickly to the closing table. 

Have all of the partners consent and sign a corporate resolution to sell before signing the listing agreement.  This protects you when offers come in and one partner changes their mind or another is in Brazil for two weeks without email.  Sign and get a corporate seal on a document that says, the corporate officers met and agreed to sell the business by a vote taken this day.  Give one partner the authority to sign on behalf of everyone else.  When the partners are a husband and wife, this step is sometimes unnecessary.  If there are several partners in the business, the broker may require the resolution along with signature on the listing agreement. The broker will have a copy of this form and a copy is included in the appendix.

Check Your Legal Status

Make sure you understand who is selling the business.  The listing agreement must be signed by the legal entity that owns the business assets for sale (and the one on the liquor license).  Therefore, the legal name of the selling business is always used on the contract.  Another step you should take as a seller is to verify the status of your corporation.   Go online at the Secretary of State website for your state and make sure that the officers listed in the state website are correct and that all filings are up to date.  Failing to do this at the onset will cause problems down the road when a contract is written.

Relax and let the Restaurant Broker Work

Once the listing is in place, keep the business in the best possible shape.  Make sure sales stay flat or are increasing (never in decline).  Look at the business with a critical eye and go ahead and call in the cleaners and make minor repairs to freshen up the store.  Most of all, concentrate on what you do best – operating a business and let the restaurant broker focus on bringing a buyer to the table.

Follow these basics on how to sell a restaurant and you’ll go from a restaurant for sale to a restaurant sold without a hitch.

Looking for the restaurants we've sold?  Check out our restaurant seller testimonials from other restaurant sellers at this link.

Topics: selling a restaurant