Advice for Buying a Restaurant and Selling a Restaurant

Reasons to Buy these Franchise Restaurants for Sale in in Sunny Florida

Posted by Robin Gagnon on Mar 29, 2017 10:01:29 AM

Are you ready for sunshine, no state income taxes and a business friendly climate?  Do you like franchise brands and want the opportunity to "own" a market with room for expansion?  We Sell Restaurants may have the listings for you in Jacksonville Florida.  These franchises for sale are part of a national brand offered at an incredible price!

Buy the entire market and get an incredible "wrapped" car that scream this brand as it travels in and around the market!  The two stores are ready to go and wait, there's more -- an opportunity to expand with additional locations.  The seller is including a right to develop another unit in this market.

Each store has reasons to buy.  The first one is highly developed in catering with Jacksonville U and the University of North Florida – both ideal targets for this upscale brand.  The second store is in a small business mecca for the area.  More development including a Hospital and Medical center to come will create tremendous foot traffic for the lunch business.

Manageable sizes for both locations and long term leases with options to renew give these locations plenty of future stability. Located in the sunny state of Florida these locations come with an opportunity to move to a booming area with great weather!. No snow days to worry about in these locations!

Already producing sales exceeding $600,000 from day one allows any new owner can come in and become part of a winning brand! These Sandwich Franchises for Sale get best in class training consisting of four full weeks where you learn every position. Training from all areas of the business from on the line along with key management skills and reporting on your POS system that will be Ipad based and provides the answers you need to run your business.

What are you waiting for? Learn More.. Click Now:

 
 
Listing ID:5176 Restaurant Broker Robin Gagnon    
Two Franchises for Sale - Right To Develop and Wrapped Car!
Lease: Valid through 2020 with 2 5 year options | Valid through 2017 with 3 5 year options
Monthly Rent: $4700 | 4162
Inside Sq. Ft. 2000 | 1550
Outside Sq. Ft.
Price:$375,000
City:Jacksonville

Robin Gagnon
(404) 800-6701

Topics: sell restaurant, sell a restaurant, buy a restaurant

Top Ten Restaurants for Sale in February 2017 by the Restaurant Brokers

Posted by Robin Gagnon on Mar 3, 2017 5:48:31 PM

 

Listing ID:5269 Restaurant Broker Ken Eisenband    
Restaurant for Sale in Hollywood - Owner is Retiring
Lease: Expires July 31, 2017 with options to be negotiated
Monthly Rent: $2650
Inside Sq. Ft. 1650
Outside Sq. Ft. 120
Price:$79,000
City:Hollywood

Ken Eisenband
(561) 350-3365

Buyers love to see their options and show their creativity with a blank open ready to lease space! This restuarant space for lease space in Johns Creek is a manageble size in a highly desired area. This location is ready for your new restaurant.  

Listing ID:5274 Restaurant Broker Cyndi Weinbaum    
Restaurant Space for Lease in Johns Creek, Georgia - Great Location
Lease: Negotiable
Monthly Rent: $$20.00 PSF + $4.43 CAM
Inside Sq. Ft. 1200 (Adjacent site can be added bringing total to 2400 Square Feet)
Outside Sq. Ft.
Price:$0
City:Johns Creek

Cyndi Weinbaum
 

Coming in at number three on the most popular restaurant for sale listings this location features one of the most desired trends in Atlanta, Hookah!  On the market for less than 2 weeks and this listing is already making the top 10 list! This restuarant for sale is on fire! Bring your offers to Restaurant Broker Steve Weinbaum. 

Listing ID:5275 Restaurant Broker Steve Weinbaum    
Bar for Sale in the Heart of Downtown Roswell - Profitable
Lease: 2 Years + 5 Year option
Monthly Rent: $3000
Inside Sq. Ft. 4000
Outside Sq. Ft. 225
Price:$249,000
City:Roswell

Steve Weinbaum
(770) 714-4552

South Florida makes it back on top with this restaurant for sale by Ken Eisenband.  This listing comes with a great Florida location and a popular Italian concept. Newly built out in Palm County -- you can keep the current concept or you create your own.

Listing ID:5254 Restaurant Broker Ken Eisenband    
West Boca Raton Restaurant for Sale is Searching for New Owner
Lease: Expires December 31, 2020 plus five year option
Monthly Rent: $3000
Inside Sq. Ft. 900
Outside Sq. Ft. 100
Price:$150,000
City:Boca Raton

Ken Eisenband
(561) 350-3365

Sunshine and Sushi! That is what this Broward County, Florida restaurant for sale listing offers. Profitable as it stands or make it your own with the excellent demographics. Fully equipped and ready to go, this location  will soon have one less fish in the sea.

Listing ID:5087 Restaurant Broker Ken Eisenband    
Profitable Restaurant for Sale in Tamarac Can Easily Convert to Any Concept
Lease: Expires April 14, 2020
Monthly Rent: $2037.50
Inside Sq. Ft. 1200
Outside Sq. Ft. 0
Price:$49,000
City:Tamarac

Ken Eisenband
(561) 350-3365

Before you know it Cino De Mayo will be here and what a better way to celebrate than with a SIX figure earnings from a  Mexican Restaurant for sale located in Houston, Texas.  This listing has been on the market a very short period of time and we have competing offers in play.  

Listing ID:5258 Restaurant Broker Steve Weinbaum    
Mexcian Restaurant For Sale in Houston Texas Delivers 6 Figure Earnings
Lease: 6 Months plus 3 year option
Monthly Rent: $9300
Inside Sq. Ft. 3960
Outside Sq. Ft. 1500 / 1200 covered
Price:$299,000
City:Houston

Steve Weinbaum
(770) 714-4552

Looking for small town living in a big state? This cafe for sale in Colorado comes with a farm to fork concept that keeps locals and tourists visiting. The compact simple menu keeps costs down and allows for more earnings by the owner.  Contact restaurant broker Bob Steinberger to learn more about this opportunity today. 

Listing ID:5016 Restaurant Broker Bob Steinberger    
 'Farm-2-Fork' cafe' for Sale in Colorado!
Lease: 4 years remaining plus 2 year option same terms
Monthly Rent: $900
Inside Sq. Ft. 1400
Outside Sq. Ft. 600
Price:$49,000


Bob Steinberger
(303) 901-4938

It's no wonder this Bar and Grill for sale in Atlanta keeps buyer clicking for more! This location offers their client base fun events that keeps earning high! Earnings over SIX figures this location will surely be gone soon!

Listing ID:5153 Restaurant Broker Robin Gagnon    
Bar and Grill for Sale in Atlanta - Own Your Own Version of Cheers!
Lease: Valid through September 30, 2020
Monthly Rent: $9225
Inside Sq. Ft. 6000
Outside Sq. Ft.
Price:$295,000
City:Lawrenceville

Robin Gagnon
(404) 800-6701

This cafe for sale is gourmet in menu and benefits! Located in Pompano Beach , Florida, super great rent is under $1800 per month.  This profitable restaurant business for sale is forecast to exceed $80,000 in earnings!  

Listing ID:5271 Restaurant Broker Ken Eisenband    
Sandwich Shop for Sale - Profitable Gourmet location in Pompano Beach
Lease: Expires September 9, 2019, plus five year option
Monthly Rent: $1746
Inside Sq. Ft. 900
Outside Sq. Ft. 300
Price:$150,000
City:Pompano Beach

Ken Eisenband
(561) 350-3365

Located in one of the most desired locations in Cobb County, Georgia this Hot Concept franchise for sale has buyers ready to find out everything! This Franchise for sale opportunity in booming Kennesaw Georgia is priced at a steal!  It's only $75,000 and sure to roll off the market with a buyer soon!

Listing ID:5303 Restaurant Broker Robin Gagnon    
Franchise for Sale in Booming Kennesaw - Cobb County - Georgia
Lease: 2 years remaining plus a 5 year option to renew
Monthly Rent: $1900.00
Inside Sq. Ft. 1000
Outside Sq. Ft.
Price:$75,000
City:Kennesaw

Robin Gagnon
(404) 800-6700

The month of February is know to be the month of love. Our buyers sure loved the opportunity to find out more about these top 10 restaurant for sale listings. These business opportunities are from all parts of the country which shows buyers are everywhere! D

Ready to take a look at some of the latest offerings?  Click this link for the latest listings online.

Check Available Listings

Ready to Sell? We have buyers ready!

Free Restaurant Valuation

Topics: buying restaurant, sell a restaurant, selling a restaurant, buy a restaurant

Catering Restaurant For Sale with Airport Contracts in Mableton GA

Posted by Robin Gagnon on May 21, 2014 4:12:00 PM

Buy this catering restaurant for sale and you are taking over some rich airport contracts at Atlanta's Hartsfield Jackson International Airport!  

The contracts serviced by this catering restaurant for sale are for the world's busiest airport based on passengers and the number of flights.  Imagine, 95 million passengers (more than 260,000 per day) pass through Atlanta's Hartsfield Jackson International Airport.  It's nodescribe the image

wonder outside vendors are contracting with this catering restaurant for sale offered by the restaurant brokers to service the need that continues to grow by leaps and bounds.  This catering restaurant for sale has two separate contracts.  The first produces $20,000 to $25,000 per month in sales and the second one is at $8,000 per month and still growing each month.   

This established catering restaurant for sale is Good Manufacturing Process Certified so that it can supply the lucrative contracts it has in place with the airport.  A Good Manufacturing Practices (GMP) certification means that an independent party has verified and certified that the basic manufacturing practices and prerequisites necessary are in place for an effective food safety program.  

This is a growing business with sales last year of $250,000 that's on track for sales this year of $380,000. They have done the heavy lifting by securing the contracts and the rigorous effort to be Good Manufacturing Process Certified.   Now the opportunity is unlimited to expand to Army bases, win government contracts and more.  
Are you a process focused owner that wants out of the tough hours and heavy commitment in time away from your family in a traditional restaurant environment? Then buy this catering restaurant for sale and work Monday, Wednesday, Friday and Saturday fulfilling repeat orders for food to go that these big vendors pay for promptly.  It's all about process and follow up.  All the technology is in place to keep growing.  They have bar code technology to wand in and wand out the inventory prepared and make sure it is tracked to the letter. 

Topics: we sell resataurants, atlanta restaurants, buy a restaurant, atlanta restaurants for sale, atlanta restaurant broker

Tavern for Sale in Atlanta GA. Features High Sales & Owner Financing!

Posted by Robin Gagnon on May 16, 2014 10:44:00 AM

55979 IMG 0472Buy this Tavern For Sale In Northwest Atlanta and take advantage of owner financing.  

Ready to own this Tavern for sale? Your new business is located in a beautiful Downtown "Main Street Setting" where you are the local bar and everyone knows YOUR name! 

Gross sales for this tavern for sale exceeded 600,000 last year.  Low rent combined with great liquor sales along with beer and wine produced six figure earnings for the operator in the range of $150,000.  Seller financing is availableto qualified individuals.  This tavern for sale features an attractive low rent of $2150 per month on this 2000 square foot property.

This tavern for sale seats 24 inside and has room for 12 additional diners to enjoy the weather on the patio.  There is ample parking in front of and around the building, and this tavern for sale draws many diners on foot who work in the surrounding downtown area.  

Fully equipped commercial kitchen turns out a menu that has all the basics.  Hood, grease trap, fryers, refrigeration and more to accommodate the menu of the tavern for sale.  Locals return often for their favorites including, thick burgers and hand-cut fries, as well as some more contemporary fare such as "low country" shrimp and grits.  A great selection of cold draught beer makes for a great dining experience.

If you're looking to be in the restaurant business, yet enjoy a "smalltown" lifestyle just minutes from metropolitan Atlanta, this is it! Great local businesses and repeat regular diners help support this well-established business.  The hours of operation are Sun-Thurs 11:00-11:00, Fri and Sat 11:00-2:00 AM

Located in the county seat of a northwest Atlanta community with a growing population,the sky is the limit for a hard-working owner-operator with a great vision and concern for this customers! Contact the restaurant brokers today about this prime opportunity to buy this tavern for sale.

Topics: we sell resataurants, atlanta restaurants, buy a restaurant, atlanta restaurants for sale, atlanta restaurant broker

Buy a Cafe for Sale or Start My Own – What’s the Best Strategy?

Posted by Robin Gagnon on Jan 18, 2012 6:30:00 AM

risk pix resized 600Restaurant brokers are often asked why someone should buy a café for sale when they are brimming with excitement and ideas to open their own restaurant.  Here are just some of the advantages for buying an existing café for sale versus launching your new restaurant business from scratch.

The Cafefor Sale Comes with Certain Costs
When you buy an existing restaurant, you know the offer price on the contract is what you’ll pay.  You can stick to a firm budget that includes your acquisition cost, legal fees, licenses and transfers.  When you start building a restaurant from scratch, budgets have a habit of growing far beyond your original target.   Restaurant startup projects often resemble the once popular “flip your house” shows on cable TV that typically end over budget and beyond the timeline.  

The Cafe for Sale is Open and Operating  
Time is money in every business. Your great restaurant idea can be operating tomorrow with the purchase of an existing concept.  When you put together a startup you have to get permits, build it out, prepare the marketing, do the launch before you open the door and serve your first customer.  Serve your first sandwich tomorrow after buying a café for sale instead of waiting months to go to market.  There’s a window of opportunity to go to market and you don’t want to miss it because you’re fighting with the city to get a building permit.

The Cafe for Sale Has Existing Customers
Any brand new restaurant has to build the initial dollar of sales and every dollar thereafter incrementally. The first $100,000 of sales volume is the toughest to achieve. Starting from zero sales is a daunting task no matter how well known you are in the industry or how many customers you believe will visit your store.  

The Cafe for Sale Has Income
An absence of sales means zero earnings when you build your own restaurant.   Unless the café for sale you’re buying is an asset sale, an existing café for sale offers a profit margin from day one.  When you build from scratch, everything is an estimate and nothing is certain.

The Cafe for Sale Reduces Your Risk
The final point in the comparison between buying an existing restaurant and building one from the ground up is the risk factor.  In addition to existing sales and earnings, you know from the outset that the location meets local and state codes for operation of a restaurant.    

When you compare a café for sale to a startup venture, it’s clear that one has advantages over the other.  It is easy to see why the shortest time to market and greatest control over costs comes when you buy a cafe for sale instead of building one.

Topics: cafe for sale, build your own restaurant, buy a restaurant

Restaurant buying 101. How to buy a restaurant

Posted by Eric Gagnon on Dec 27, 2011 1:00:00 PM

Buying a restaurant takes understanding of the industry and access to restaurants for sale.  Here’s how to get both.

Record numbers of Americans searching for a small business combined with a hunger for all things “foodie” are creating a perfect storm of demand for buying a restaurant.  It’s no wonder buyers are seeking out established restaurants for sale since building a restaurant from scratch is such an uncertain prospect.  Six out of ten startup restaurants are out of business by the end of year three, a grim reminder of shattered dreams. Countless restaurants don’t ever truly get off the ground since the owner’s capital is all depleted in the build out phase.    

There’s no such thing as instant success in the restaurant industry but buying an existing restaurant delivers significant advantages over starting from scratch.  Finding these existing restaurants for sale in Atlanta delivers a streamlined path to success for would-be restaurant owners. 

Buying a restaurant gives you control over restaurant start up costs. The single largest cause of failure for restaurants is lack of capital.  The capital burn rate increases exponentially when a skilled restaurant professional attempts to turn into a building contractor overnight simply because the project is an eatery.  Unless you’re a general contractor who happens to swing a hammer as successfully as you filet a swordfish, then your restaurant will take far longer to build and cost much more than you ever imagined. 

Buying a restaurant greatly reduces your time to market.  Your restaurant can be operating tomorrow with the purchase of an existing concept.  Compare that to six to nine months to permit, build and then open a restaurant from scratch.  You can be serving your first sandwich tomorrow to existing customers instead of waiting an average of seven months to open the door.

You get existing sales with a restaurant purchase.  An existing restaurant, even a struggling one, has a base of business.  Any brand new restaurant has to build the initial dollar of sales volume and every dollar thereafter incrementally.  The first $100,000 of sales volume is the toughest to achieve.  Without the expense and time spent building from scratch, you can implement marketing plans and operational changes to drive the existing sales line higher.  Starting from zero sales is a daunting task no matter how well known you are as a chef or how many customers you believe will visit your store.  

The final and most important reason to buy a restaurant is the purchase of existing cash flow.  On a comparative basis, purchasing the cash flow of an operating restaurant with good books and records is less expensive than many other business types.  The inventory is negligible and cash flow is often purchased for 2.5 times earnings or less. That means someone looking for $100,000 in cash flow can acquire an operating business churning out six figure earnings for less than $250,000.  There are few other investments where placing $250,000 on the line nets you a 40% return in the first year and pays off in two and a half years. 

You can find restaurants for sale listed with expert restaurant brokers who specialize in buying and selling restaurants.  The cost is certain, the sales line already exists and the cash flow is provable.  Most importantly, you can own a restaurant tomorrow. 

Topics: restaurant broker, buy a restaurant, how to buy a restaurant

Why It Is Important to Start with Experience When Buying a Restaurant

Posted by Robin Gagnon on Jun 15, 2011 2:22:00 PM

When buying a restaurant choosing to work with an experienced business broker who specializes in the restaurant industry is well worth your investment. An experienced broker, who works with restaurants, bars, and nightclubs, will not spend their time on a wide variety of other businesses.

An experienced broker who specializes in the restaurant business will be able to work with every aspect of the business in addition to overseeing the details of putting the deal together. For example, if you contact them to inquire about an equipment inspection you can bet they will have multiple contacts on their cell phone. Inquire about a food safety education program and you can count on them to have a list of dates. If you ask them where you can find an Ancel System service they will know that it is a fire system and have someone there within 24 hours. The services of an experienced restaurant broker are similar to having an expense paid consultant at your beck and call since the broker is paid through the commissions of the seller.

Purchasing a restaurant is a once or twice in a lifetime experience for you.  It's a weekly activity for a restaurant broker.

Cnduct a search online for an experienced restaurant broker and interview them by phone.

Find an experienced broker by searching online for restaurant listings.  Brokers that have multiple restaurant listings should have the experience you are looking for.  Visit their website.

If the broker provides articles and quality advice chances are they are dedicated solely to selling restaurants. Notice if they use a lot of “fluff” or offer facts such as lease terms and amount, gross sales, net income, or owner benefit.

Determine the broker's level of experience of the broker through their social media marketing strategies.  Experienced brokers will offer quality information related to their area of expertise on their blog, Twitter, Facebook, LinkedIn, YouTube, and any other type of online social media tools.  

Review their blog and pay attention to the topics they are discussing in their blog posts. You should find information on relevant trends, industry happenings, and restaurant news.

Review a restaurant broker's biography, professional background and education, licensing, and professional affiliations. When it comes to state and federal licensing there is no criteria to meet for a business broker and the licensing does not help to separate the experienced from the unqualified brokers. Not all states require business brokers to have a real estate llicense. 

Once you complete this phase of broker research call the broker to see what kind of response you get. Do they personally answer the phone or return your calls within a reasonable period of time? You want to be sure that they are available and working for you instead of simply hiding behind a sharp online presence. Also, if you work a regular job and you are searching online in the evenings, try calling the broker during this time to see if they answer the phone or send an email to see how fast they respond. Ask the broker about a specific listing, follow through with the confidentiality agreement and then request a package. It is worth your time investment to do your homework ahead of time to ensure that you find a restaurant broker that is qualified, professional, and dedicated to helping you buy a restaurant

Topics: buying a restaurant, restaurant broker, buy a restaurant

It's Bobby Flay Day on the radio show with Restaurant Brokers

Posted by Robin Gagnon on Nov 9, 2010 4:41:00 PM

Bobby Flay interview, restaurant liquor license renewal time, restaurant sales trends and more.

End of the year - December 31 is the Georgia liquor license renewal time.  That can be a bit tricky when trying to buy or sell a restaurant.  The deadline for the state is firm but each city or county may require something different.  Does that mean it's a good or bad time to buy a restaurant?  Well, Donna asks that question and the response, "It's always a good time to buy a restaurant from We Sell Restaurants."  Atlanta brokers tell buyers to get busy if they want to take over ownership this year however since some planning can be required to make sure that everything transfers appropriately prior to year end.  Donna asks is it a smart thing to buy a restaurant this time of year and the answer depends on the buyer's personality.  Some buyers thrive in a trial by experience environment.  That means going into ownership fourth quarter when things are busy can be a great thing.  If you prefer to learn more slowly, then wait to first quarter when the market is not at the peak.  Eric points out that there are huge revenues this time of year so your capital outlay will be replenished faster by acquiring strong cash flow this time of year.

The radio audience was also treated to some great information from local CPA Robert Wagner who surveys the local restaurant marketplace.  His most recent data shows 78% of Atlanta restaurants reported positive gains and nearly 75% showed double digit sales gains. Eric and Robin have been reporting similar results for weeks but this is true statistical data that says Atlanta restaurant sales are heading in the right direction and this latest quarterly result is excellent.  Atlanta is going back to eat in restaurants and the numbers prove this out.

Lastly, Atlanta restaurant brokers report that they were broker of record for the sale of Buckhead Pizza Buford (the Mall of Georgia location).  The new owners are thrilled to be taking over this established business.  They will follow the recipes and management traditions of the current owners under a licensing agreement.

Topics: restaurant brokers, buy a restaurant

Buy a Restaurant, Buy Out Assets or Build from Scratch? We Explain.

Posted by Eric Gagnon on Oct 27, 2010 4:37:00 PM

I can lease a restaurant space and equip it for less than that!  That's the feeling of many buyers seeking a restaurant space but before you throw out the idea of buying someone else's operation, consider the costs.  Used equipment for a restaurant fully equipped at the least is $35,000 to $45,000.  That's before you locate every single piece of equipment you need (some from this supplier, some from that!).  It doesn't include trucking all that equipment to the restaurant and then getting a qualified electrician, plumber, gas technician, engineer and more to set it in place and make sure you don't blow up the shopping center.  How much is that?  Figure another $2500 - $5000 to be on the safe side. If something doesn't work, you have to get it repaired or pull it out and return it to the vendor.

 

You're now up to almost $50,000 and you don't have anything in the front of the house.  What about those chairs, tables, tablecloths, dishes, flatware, bowls, serving plates...the list goes on.  Figure another $3500 if you're buying used, carting it yourself and buying at a good rate.

Now you're up to $53,500 and you haven't opened the doors.  Now the fun begins.  You need to get inspected by the state, get a food service permit, get a liquor license and wait on the city and or county to react on each of these.   Are you having fun yet?  You'll have another $1500 to $5000 in licensing and you haven't poured your first drink yet.  You're up to $58,500.

Since you're waiting on the restaurant to open, you're paying rent or burning up free rent waiting out the 30 to 60 days it takes to get operational. That's another $5000 to $8000 in rent while you aren't doing any business.

Then you open the door and do your first dollar of business.

Compare that to buying a business that's fully equipped, operating with food service and alcohol permits in place and most importantly, generating sales.  You can inspect the equipment in working condition and negotiate to be sure everything's operational before you take over.  

We Sell Restaurants tells Dishing with Donna listeners why it's our position that if you can get an operating business generating a sales flow for under $99,000, it's not worth the headache, wait and costs to try and buy secondhand equipment and do it yourself.

Topics: buy a restaurant, lease a restaurant space

How to buy a restaurant franchise, the Franchise Rule of Three

Posted by Eric Gagnon on Jun 15, 2010 1:14:00 PM

Why buyers looking for a franchise restaurant for sale should never be the first or second owner of a restaurant franchise if your goal is making money.

A well known and often cited study by H.G. Parsa, an Ohio State University hospitality-management professor determined that 61% of all start up restaurants fail in the first three years.  By contrast, 57% of all franchise restaurants fail before the end of three years.  That’s not a ringing endorsement for the security of a franchise. 

What does this mean for the would-be restaurant owner?  Buy restaurant history, experience and the business books and records. A restaurant with a three-year history in the same location with profitable books and records is a far safer bet than a franchise start-up. Over a decade of watching franchise start-ups come back onto the market for re-sale, we’ve developed the We Sell Restaurants Franchise Rule of Three.  Buyers that stick to these rules get the maximum benefit from buying an Atlanta restaurant franchise without over paying for it. 

Here’s the usual course of an Atlanta franchise restaurant.  The original owner invests $375,000-$400,000 in build out with stars in his eyes about how great this Atlanta franchise restaurant is going to be.  Forget the fact that he’s invested $400,000 in a unit that sells premium ice cream with an average ticket of $8.50 only busy in the summer months.  He’s convinced after the franchise boot camp that he’s got a winner on his hands.  He calls after a disappointing year of red ink and wants to know, who will give him what he has invested in his business.  The answer, sadly, is no one.  If the franchise is a hot concept in a pristine location, the next Buyer may be willing to pay as much as $99,000 to $149,000.  That’s over paying based on Seller’s Discretionary Earnings since at this point the restaurant is still losing money.   

The second owner more often than not ends up with a restaurant losing money for which he paid around $100,000.  Because his cost structure is lower (lower cost of capital to attain) and the sales line has matured, he may be able to get it out of red ink and into the black with franchise fees due and payable on every transaction.  He usually makes it through year one or two before he says, “Enough is enough.  I’m earning minimum wage here and working 50 hours a week in the store.  I have to get a job to feed my family.” That’s when the bargains kick in.  The franchise goes on the market as a mature concept for a multiple of earnings.  The third owner is the one who buys it right.  

The price has now decreased a third time. It’s listed and sold for no more than three times earnings on the books.  The expense is minimal and the sales line has had time to mature and catch up with fixed costs.  The buyer for a third generation franchise ultimately gets the best deal in the marketplace.  He gets a good brand, top line sales, limited earnings and a low (or fair) cost of entry.  The first guy is the one that takes the bath.  The second guy is a close second but number three is the winner.  That’s why we developed the We Sell Restaurants Rule of Three for buying a franchise.  

We Sell Restaurants Rule of Three for Buying a Franchise

1)      Make sure you’re the third owner of the franchise at that location if you want the best possible deal.

2)      Buy early in the third year of operation to maximize the long term earnings.  The business is still immature enough to see long term growth in sales but priced based on low current earnings. 

3)    Never pay more than three times earnings no matter how glamorous the franchise wants to paint the potential to be.  Remember that all other factors of valuation still apply whether or not you're buying a franchise.  

Topics: franchise restaurant for sale, buy a restaurant, buy a restaurant franchise