Advice for Buying a Restaurant and Selling a Restaurant

3 Main Mistakes in Due Diligence When Buying a Restaurant

Posted by Robin Gagnon on Sep 11, 2019 12:23:46 PM

The most common mistakes we see with those buying a restaurant is failure to understand the due diligence process. Due diligence is undertaken to confirm the items learned during the initial discovery phase of the business.  For those buying a restaurant, the issues fit under three major headings:

Due d
  • Too Soon
  • Too Much
  • Wrong Focus

Let’s look at these one at a time.

Too Soon -

When buying a restaurant, some take the approach that they want to see everything, and they want to see it before any form of an offer is made.  As Restaurant Brokers, we’ll receive a laundry list of items before a deal even goes into contract. Taking this approach, however, can hinder your ability to purchase.  Here’s why.

Sellers are cautious by nature.  They want to avoid revealing too much about their business until the buyer feels more “certain” to them. They trust the broker but aren’t sure, (YET) whether they have faith in the buyer to keep this information confidential.  Even though a confidentiality agreement may be in place, they are thinking of the people who work in the store, their customers and their current livelihood.  All of these are put at risk if someone doesn’t honor the terms of the confidentiality agreement. 

It’s too soon if you start pushing for items like tax returns and 941 filings before a deal is even accepted.   There hasn’t been enough time in the transaction to develop the trust needed between the parties.  It will happen; just not at the outset. 

To avoid the problem of “too soon,” it’s better to go into an agreement to purchase, with a due diligence period and a fully refundable escrow if you are not satisfied.  If the books don’t bear out in the due diligence period, you have the option to terminate or renegotiate the pricing or terms.

Asking for sensitive data like tax returns and 941 filings before a deal is even accepted is often a path to seller resistance, buyer stubbornness and ultimately, failure in buying a restaurant.

 

Too Much

There is a checklist for buying a business floating around on the Internet that is ten pages long and has about 100 items on it.  I know this because I’ve been presented with the exact same checklist dozens of times. 

This list asks for items that have very little to do with buying a restaurant.  I’ve received it on franchise transactions multiple times.  This list asks for terms of the intellectual property owned and all trademarks and patents.  HINT:  The franchise brand owns the intellectual property and the rights to all trademarks and patents.  It also asks for the minutes from every shareholder meeting.  HINT:  The average small business being transferred has one meeting on the books – the one that established the legal entity.  There’s nothing else.  It also asks for contracts with every vendor.  AGAIN – the average main street business doesn’t have vendor contracts.  If they are a franchise, they typically have one, their franchise agreement. 

If I receive this checklist after I’m in contract, it tells me that as a business broker, I need to do a better job to setting expectations and providing good stewardship over the deal.  I need to make sure my buyers seek my guidance about what they should be looking at in buying a restaurant.  If I receive this checklist before a deal is even made, I know I have a buyer who doesn’t really understand what he is buying and probably needs some more education about the industry and small businesses in general. 

If your interpretation of due diligence is to Google - - “Buying a business Due Diligence Checklist” and present your broker with a ten page document that isn’t relevant, it’s TOO MUCH, the second mistake made by most buyers.

 

Wrong Focus

Along with too soon and too much, the third mistake is “wrong focus.” Some of the items cited above are examples of items that are not relevant to the transaction.  Another area where buyers spend too much time and money are in areas they can’t change.  One example is the franchise agreement review.  It is rare to never that a franchisor will change the terms of their franchise agreement.  It simply doesn’t happen.  All 1,000 units operate on a similar plane and they simply will not exempt any one party from certain element. 

When a buyer spends time hiring an attorney to review the franchise agreement, knowing that it cannot be changed, it’s the wrong focus.  The restaurant buyer should be looking at whether a franchise model is the right fit for him or her.  If he wants to change the menu; a franchise is not a good fit.  If he or she wants to reduce the royalties to earn more money, it won’t happen.  Don’t waste precious dollars focusing on the items you cannot change.  Instead, focus on the items in due diligence open to negotiation or change.

These three mistakes in due diligence can cost you the restaurant you want to buy.  Avoid pursuing due diligence too soon.  Be careful of requesting too much and lastly, watch your focus.

Topics: Buying a Restaurant, Restaurants for Sale

Cost Versus Risk - “Pros & Cons” of Buying vs Building a Restaurant

Posted by Steve Weinbaum on Aug 26, 2019 1:51:44 PM

In my line of work, as a Certified Restaurant Broker, I speak to hundreds of folks every week looking to own their own Restaurant, Bar, Café, or Treat Shop.  Many are looking to purchase an established operating and profitable business while others are looking to launch their own. This important decision applies equally to independent restaurants as well as franchises, Fast Casual as well as Full Service…  At the end of the day, I believe strongly that the decision comes down to two key factors; Cost and Risk

 Consider the Cost

Building out a new restaurant from scratch can cost hundreds of thousands of dollars and take many months to complete.  During that time you may be paying rent, likely be paying off a loan, while not realizing any revenue.  Once you open there will be “ramp up” time establishing your business/brand in its new location.  When buying an existing independent or franchised restaurant, your budget and earnings goal dictate the cost.  Established restaurants are valued and sold based on current revenue and Owner Discretionary Earnings (ODE).  Depending on the restaurant’s financials, you may be able to acquire an open and operating restaurant for much less than the cost of building out a new one.  Most Franchise websites will tell you how much is will cost to build a new location from scratch.

Buying a Restaurant Versus Building a Restaurant

Consider the Risk

Building a new independent or franchised restaurant does not guarantee success.  Over 50% of new restaurants close within the 1st 3 years.  The average lease term is 5-10 years as is the loan it took to build that restaurant or franchise.  While there are highly successful restaurants that were established three years ago or less, the odds are against you.  When you buy an existing independent or franchised restaurant, you typically have access to years of financial history.  You can examine key factors such as rent expense, cost of goods, salaries, all as a percent of sales, to determine the profitability of the restaurant.  This is a powerful advantage that puts the new owner in the driver’s seat.

Consider the Reward

For many of us, owning our own business, being our own boss and in control of our financial well-being is an aspiration.  Unfortunately, we don’t always have the stomach or are in the fiscal position to take that leap.  But consider this…the average successful independent restaurant sells for 2-2.5 times verifiable owner earnings.  Franchised restaurants sell at closer to 3 times earnings.  If you need to replace an income of $100,000 per year, which would put you in the to 10% of all US wage earners, you should be able to find an established and profitable independent restaurant for under $250,000 and a Franchised restaurant for under $300,000.  SBA lending is an option so assume you will need approximately 30% of the purchase price for acquisition and initial working capital.  “Do the Math…” for as little as $60,000 you can own a business that provides you with a six figure income!  Sometimes the current owner will even consider Seller Financing.

Consider the “Risk vs Reward

Ultimately, everyone’s individual situation will dictate how they go about making the leap to restaurant owner.  For some, the risk of starting up a new independent or franchised restaurant from scratch is appealing.  For most of us, however, our current financial responsibilities combined with a need for a secure and guaranteed income makes acquiring an existing restaurant a much more viable and palatable option.  We Sell Restaurants is the largest restaurant broker in the country with close to 500 restaurant for sale listings available throughout the United States.  We would be happy to help you find the perfect restaurant to support your lifestyle and financial goals.

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Topics: Buying 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

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.

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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.

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Topics: Buying a Restaurant, Restaurants for Sale, sold

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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Topics: Buying a Restaurant, Selling a Restaurant

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
2019 Conference

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