Advice for Buying a Restaurant and Selling a Restaurant

As the Restaurant Brokers Predicted, 2018 Business Sales Climb to New Heights

Posted by Robin Gagnon on Apr 16, 2018 10:03:51 AM

The Restaurant Brokers have been bullish on restaurant sales since very early in 2017 and our predictions have been spot on with reports from the marketplace.  BizBuySell is confirming our findings, stating that the first quarter of 2018 brought "record-breaking sales prices and transactions"  for  business sales.

Orange Accent Photography Quote2018 Versus 2017 Results

Asking prices, count of restaurants on the market and selling prices all rose in the first quarter of 2018 versus 2017 acording to the latest tracking data released by BizBuySell.  In their report, "small businesses sold for the highest sale prices since they started tracking data in 2007."  That's a decade ago!  Selling prices were up 3.4 percent increase from last year at this same time.  Asking prices are up as well.  Their report says that the median asking price of sold businesses also hit a record high.  The number was $262,000, a 4.8 percent increase over 2017.

There were a total of 2,678 businesses sold in the first quarter of 2018. This represents a 13.1 percent increase from this time last year and the most businesses reported as sold in a quarter since BizBuySell began collecting this data. What about restaurant sales?  Restaurants represented 21% of all businesses sold.  From our internal data, as the largest restaurant brokerage firm nationwide, we can confirm that transactions, asking prices and selling prices are all up from last year.  Restaurant transactions were up 7.65 nationwide in the first quarter. 

Drivers of these Results

What's driving the change?  It's the Trump effect and specifically, the tax bill.  Small business owners are listing businesses they previously held back on because they know the tax consequences are less when it sells in 2018.  Simultaneously, small business confidence is at an all time high.  The tax bill has made a number of buyers and seller realize that their efforts will put more money in their pocket so small business ownership is looking good to them.  

The strong stock market has also contributed to the boom in restaurant sales.  Many buyers rely on 401K savings and fund acquisitions through rollover products.  Now that their savings have seen a 20% to 25% bump in the last year, they are feeling flush with cash and ready to invest in themselves. 

Will it Continue?  Only if the Tax Bill Remains Unchanged

What do the trends look like?  Here's the quarter by quarter graph released by BizBuySell showing the sale price versus asking price since 2014.  You'll see that the first quarter of 2018 has the highest point on the graph.  The restaurant brokers fully expect this trend to last for the year with one caveat.  Should the Democrats take back control of the House or Senate, putting them in a position to reverse the tax package, as they have pledged, expect these numbers to tumble significantly.  

2018 Q1 Small Business Sale Price vs Asking Price

For now, the tax package has not only spurred tremendous growth in sales, it is also paying for itself, a little discussed fact released by the Congressional Business Office or CBO last week.  Last June, the CBO said GDP growth for 2018 would be just 2%. Now it figures growth will be 3.3% — a significant upward revision. It also boosted its forecast for 2019 from a meager 1.5% to a respectable 2.4%. The CBO now expects GDP to be $6.1 trillion bigger by 2027 than it did before the tax cuts. The CBO report also makes clear that this faster-growing economy will offset most of the costs of the Trump tax cuts.   BizBuySell surveyed business owners and and nearly half of them (more than 48 percent) believe the tax changes benefit small businesses.  Less than a quarter (24 percent) found it harmful. 

Business Confidence Rules

The restaurant brokers aren't the only ones discussing business confidence.  The NFIB or National Federation of Independent Business group surveyed its members in February.  In their  Small Business Economic Trends Survey, they reveal that "small business owners are showing unprecedented confidence in the economy."  These results are spilling over to unemployment numbers which has fallen to 4.1 percent, the lowest since the dotcom boom back in 2000.  That is also affecting small business owners and of those surveyed by BizBuySell, 60 percent plan to hire more staff and 57 percent plan to raise compensation.  

 All of this economic growth is pushing those interested in small business ownership to seek opportunities like our restaurants for sale, especially since the businesses themselves are performing better. 

Cash Flow Trends

Restaurants for sale like the ones we represent are priced based on cash flow.  The businesses sold in the first quarter of the year reproted higher earnings.  That is the trigger for rising valuation and ultimately, higher selling prices.  The median cash flow of businesses sold in Q1 increased to $120,000, a 2.3 percent increase over the same time last year.  This is still a minor raise that would not dramatically affect pricing but we expect to see this trend continue up as well.  Businesses selling in 2018 are reflective of 2017 earnings.  As trends strengthen this year, this will be factored into the valuation of transactions later in the year.  

Are more sellers putting their businesses on the market?  Yes.  The report found an increase of 6.9 percent in businesses listed.  The restaurant brokers continue to believe the time has never been bettter for selling.  Between small business confidence, the number of buyers in the market and continued favorable lending trends, 2018 is the year to sell your restaurant.

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Topics: Buying a Restaurant, Selling a Restaurant

Selling Your Restaurant? Better Start Your Spring Cleaning

Posted by Eric Gagnon on Apr 9, 2018 12:57:13 PM

 

Dark Blue and Red World Press Freedom Day Social Media Post-1Spring is in the air. We all feel driven to clean out closets, tidy up spaces and do a general touch up. Thinking of Selling your restaurant? Apply the same thought process.

Most of us take a hard look at our homes and we will try to make it look as good as we can for the upcoming months. Why not do the same for your restaurant? If you’re thinking of selling your restaurant, here are some of the major areas to focus on from the restaurant brokers. These are the major areas and ideas for your Spring cleaning.

 

Dining room, Patio, Kitchen

When it comes to selling your restaurant, you need to look up, down, and all around. When is the last time you really cleaned your dining room floor? I don’t mean just mopping it. What about steam cleaning, rebuffing, re-waxing or even replacing a tired surface. You may not look down, but your customers do.

A continuation of the dining room floor are the base boards. When selling your restaurant, no detail is too small. Take a moment and wipe down the baseboards?

For a larger project, consider touching up paint on walls, a fresh coat of paint maybe even a new color? HGTV is filled with stories of a “before” and “after.” Many of these are just fresh paint colors that can have a huge impact.

Don’t forget to look up. That A/C leak from last year that stained a few of your ceiling tiles is a constant reminder of failed equipment. Don’t let a restaurant buyer focus on these negative items if you’re selling your restaurant. Look up, fix the ceiling tiles and, how about those ceiling fans? Please don’t tell me the last time you dusted them was last Spring.

Look at your décor. Change out old faded artwork or posters. You can do better. New pictures, new TV screens, new table covers; all are easy and simple (low cost) ways to bring Spring in the air.

Your kitchen is the engine every buyer wants to see. When is the last time you pulled out your kitchen equipment and steam cleaned the entire space and equipment? Have you gone to your storage area and disposed of any items no longer in use? Consider updating to newer technologies or upgraded equipment for the upcoming busy season. New equipment may cost now but make a huge difference to your bottom line this year if the food cooks faster or the temperature is stable.

Patios are often a huge plus for restaurants but to require upkeep. That area if visible from the road could also be the first look in your establishment for many customers. Make sure you have a picture-perfect patio area. Adding water or fire elements to your patio could also make a very positive impact on your business. Your patio, seen from the road, can be a billboard for you.

Menu Spring Cleaning

When selling a restaurant, the focus is on profitability. When is the last time you took a hard look at your menu? Adding and/or deleting items, pricing adjustment, seasonal specials, promotions, LTO’s. Be very strategic here. An outside consultant or food vendor can help with this. This is a big part of your business. If you can bring up your loss leaders or trade non-selling items on your menu for more profitable and sellable items what are you waiting for? Status quo is very easy and comfortable but if your sales are not going up, you are losing marketing share.

Staff Spring Cleaning

When selling your restaurant, you want the best possible crew. Do you need to provide additional training to the current team? Should you roll out a new incentive package for the team to participate in? You can host team building activity to set the tone and expectations for the busy season ahead. Whichever you decide to do here do not overlook or skip staff spring cleaning.

You spend a tremendous of time in your restaurant and sometimes it is very difficult to step out be candidly honest with yourself about the appearance. When selling your restaurant, that first impression may seal or sink the deal.

A quick Spring cleaning can go a long way. Any changes small or big will be noticed by your team and your customers. That new paint smell or new air freshener in your bathrooms will soon become the smell of new customers and new profits.

Topics: Selling a Restaurant

What’s the Best Way to Sell a Restaurant?

Posted by Robin Gagnon on Apr 5, 2018 7:35:13 AM

Wondering about the best way to sell a restaurant? Here are some of the common approaches along with the pros and cons.

Dark Blue and Red World Press Freedom Day Social Media PostCommercial Real Estate Agent

One common approach to selling your restaurant is to find a local commercial real estate agent. This seems like a good starting point. They know the local market. They are familiar (or should be) with lease rates and they are licensed and in good standing. These are all the positive points. Is this the best way to sell your restaurant?

Compare this information with these less favorable reasons to list with a local commercial real estate agent. First, a local commercial real estate agent does not have access to a ready database of buyers in the market to buy a business. He or she typically deals with those in the market to buy a cash flow property generating a return, but these are generally people that want to be landlords rather than operators. Secondly, an agent like this is often using marketing tech

niques tied to the location like Co-Star or LoopNet. They aren’t familiar with the national marketing sites, featured listings, costs and methods to draft and market a confidential transaction. Lastly, a commercial real estate agent has comps and models for doing valuation on real estate property but frequently lack the training and skills to do a valuation on a business. It’s simply not their core expertise. For all these reasons, using a commercial real estate agent is not the best way to sell a restaurant.

General Business Broker

In seeking the best way to sell a restaurant, talking to general business brokers is a great approach. They are familiar with valuation methods, are sometimes credentialed (i.e. have a C.B.I. or Certified Business Intermediary status). They represent customers in the market to buy a business and understand how to market businesses for sale which is very different from traditional real estate. All of these are positive reasons that using a generalized business broker may be the best way to sell a restaurant.

Unfortunately, the term “general business broker” is the first clue that they may not be the best way to sell a restaurant and here’s why. A general business broker sells everything from manufacturing plants to liquor stores; from day care centers to dry cleaners. Throw a restaurant in the mix and he or she will sell that as well. That’s where the break down occurs. The analysis of the financials is best understood by someone who has sold dozens of restaurants that year, not someone selling one in 100. The ability to interact with buyers and answer questions they have related to infrastructure (is there a grease trap? How long is the hood?), and others posed by buyers is much more difficult when they are trying to remember or learn multiple industries. That’s very different from the granular level someone specializing the field will understand it. Lastly, remember the old saying that a “jack of all trades is master of none?” That applies to this instance. Based on their very generic approach to selling businesses, a general business broker is not usually the best way to sell a restaurant.

For Sale by Owner

On option for selling your restaurant is the “for sale by owner” route. Is this the best way to sell a restaurant? This is for you to gauge independently based on your situation. There are definitely risks to selling on your own. One issue is dealing with the confidentiality of the business. Who and how do you tell the world you’re for sale while keeping your employees from learning? How do you price it? What about marketing? For sale by owner is a tricky proposition that could actually cost more than it saves. We recommend avoiding this course of action unless you have a ready buyer already identified. Even in that case, it’s a good idea to bring a broker in for representation and to cover the basics.

Specialized Restaurant Broker

In this writer’s opinion, a restaurant broker, specializing in the field exclusively is the best way to sell a restaurant. Why is this the best choice?

A Restaurant Broker is both focused and expert in the industry. They are valuation specialists and understand the cash flow and add backs of a restaurant situation. A Restaurant Broker is working with clients every single day who have one single interest and that is buying a restaurant. In the case of our firm, We Sell Restaurants, we have more than 70,000 people in our database all looking for a restaurant for sale. They don’t come to us for day cares or dry cleaners, they have one mission.

A specialized brokerage firm has the depth and breadth of knowledge that is unmatched by either a commercial broker or a general business broker. For these reasons, they are the best way to sell a restaurant if you’re seeking to sell for the most money in the shortest period of time.

Do you have questions about selling your restaurant? Visit us online or give us a call today.

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Blog Byline Robin

Topics: Selling a Restaurant

Three Tips for Selling a Restaurant - a Restaurant Broker's Guide

Posted by Robin Gagnon on Mar 19, 2018 11:43:35 AM

If you are interested in selling a restaurant, these three tips provide you with a guide for the best results.  These basic concepts can help insure your desired outcome; selling your restaurant for the most money in the shortest period of time. 

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Tip #1 – Reveal that Dirty Laundry when Selling a Restaurant

Establishing a relationship of trust with your restaurant broker is a must when you are selling a restaurant. The relationship between you and your restaurant broker should be open and honest with a “no surprise” policy. It is important to make sure your restaurant broker is aware of every negative aspect of your business, so you must pull out all of your dirty laundry and reveal any liability for the sale to be successful.

Although you may feel embarrassed to tell your restaurant broker about a recent liquor license citation, a tax lien in the hundreds of thousand dollars, back rent that is owed to the tune of thousands of dollars, or even a lawsuit that you are facing from an employee, trust us, the restaurant broker has seen it all before. Talk about these issues openly so your restaurant broker can help you resolve the issues and move the deal to the closing table. Remember that the restaurant broker is highly skilled at dealing with these issues and they are equipped to help you through them one by one. It’s only when you attempt to hide issues like that that they become a reason the deal will fail.  Be open, honest and trusting with your broker and he or she should be the same with you. 

Tip #2 – Set Clear Expectations for Communication

Nothing is more disappointing than signing a listing agreement and having communication go silent.  However, remember, that restaurant broker is concentrating on selling your restaurant.  He or she is highly engaged every day with buyers, distributing information, doing calls and sending the would-be purchaser as a secret shopper to visit your business.  If it’s important for you to be looped in on all activity, set these expectations ahead of time.  Ask the restaurant broker what forms of communication they use and establish how you want to receive contact.  Do you want a text each time someone’s “hot” or do you want information weekly whether a buyer is fully engaged or not? 

Ask the restaurant broker to explain their typical style and form of communicating buyer interest to you as the seller.  Some restaurant brokers use high tech systems that automatically notify you by email when there has been an inquiry about your listing. Other restaurant brokers will simply call you when someone responds to the listing. Then there are restaurant brokers who are poor communicators and will never contact you.  By establishing what is important to you, trust is built between you and your restaurant broker.

Tip #3 – Make sure you have a Valid and Enforceable Agreement  

Formalize a listing agreement contract with your restaurant broker. Define exactly what it is that you are selling and which parties are authorized to sign so the deal can move to the closing table. This will help you to avoid any misunderstanding and make the transaction process go a lot smoother.

If there is more than one partner involved with your business, obtain their consent and sign a corporate resolution to sell in advance of the listing agreement. Following this process protects you in the event that one partner is not available or the closing or has a change of heart while everyone else is ready to sell.  Obtain a corporate seal on a document that confirms that all corporate partners have met and agreed to sell the business. Make sure this corporate resolution indicates a vote was taken to sell and designate a partner authorized to sign in the absence of the others. 

Further confirm the validity of your agreement by confirming the legal standing of your corporation.  You can visit the Secretary of State website to check the status of the LLC or corporation on the contract.  Make sure the latest corporate filing has been made.  Confirm your entity is in good standing and has not been administratively dissolved due to non-filing or non-payment.  An entity that is not in good standing cannot be a party to a transaction so this has to be handled before signing a listing agreement or purchase contract.

After following threes three tips for selling your restaurant, follow through on your daily responsibilities.  Run your business at the highest possible level.  Keep it staffed and continue doing the things that deliver a great return for you today. The last thing you want to do is pull back on marketing, staffing or quality while you are on the market.

Then trust the Restaurant Broker to do the job you hired them for.  Wait for the offer to come in and imagine the next step in your life after selling your restaurant. 

Interested in selling your restaurant?  Click this link for a free valuation of your restaurant from We Sell Restaurants. 

 

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Topics: Selling a Restaurant

Does Selling a Restaurant Require a License? You better believe it - in Many States

Posted by Robin Gagnon on Mar 15, 2018 9:14:33 AM

If you’re selling a house, you know you need a real estate agent.  That means someone who has achieved educational requirements, passed significant testing, undergone a background check and reinvests each year in continuing education. Do you know that in many states, selling a restaurant also requires a license?

It’s true. For sixteen states, it is a specific and certain legal requirement that business brokers or restaurant brokers hold a real estate license. Failure to do so is a Third Degree Felony in the state of Florida and a misdemeanor in Georgia punishable with a fine of $1000 for each violation with each day that person practices as a separate violation.

As of this date, the following states both require a license and have been very consistent in requiring a real estate license in order to sell a business without any real estate. These include: Florida, Georgia, Colorado, California, Washington, Oregon, Nevada, Arizona, Nebraska, Utah, Idaho, Wyoming, South Dakota, Minnesota, Wisconsin and Alaska. In Illinois, the law is slightly different and requires that you register with the Securities Division of the Secretary of State.  That's a total of 17 states with a licensing requirements for business brokers.  In the event that real estate is involved, all fifty states require a license for the transaction to occur legally.

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What are these states hoping to accomplish by requiring a real estate license or other form of licensing for selling a restaurant?

First of all, each license holder is subjected to fingerprinting and a background check. If there are any convictions, clouds or issues arising from the background check, the applicant will not be able to get a license. If you consider that you’re about to spend several hundred thousand dollars at the advice of business broker, is it really such a bad idea to know if they’ve been convicted of fraud first?

Secondly, a real estate licensee is subject to specific educational requirements, including legal and ethics coursework. This education insures that the person holding money and advising you on buying or selling a restaurant understands the legal elements of a contract including, escrow, consideration, buyer and seller acceptance and much more. You would never dream of visiting an unlicensed doctor, why would you put thousands of dollars in the hands of an unlicensed person practicing business brokerage?

Lastly, a real estate license holder is held to specific standards for holding escrow money, advertising listings, the language and content of listings and in some cases, even the legal forms he or she may use for a business.

Each of these items protects the consumer, you, the person buying or selling a restaurant. In the event something goes wrong, the Real Estate Commission in each state has a full complaint and disciplinary process that can result in fines, loss of a license and other sanctions, including, for those operating illegally, criminal charges.

How do you know if your broker has a license to sell your business or help you buy a restaurant? Don’t bother trying to find out on the national listing websites. This restaurant broker did a quick check online and found that in Georgia, fully 50% of the “featured” brokers advertising on BizBuySell did not have a current Georgia real estate license.

The internet has made it incredibly easy to advertise, leading to what I personally believe is the “wild west” mentality where anyone gets listings anywhere. There are no checks and balances on the national listing websites so you will not be able to tell if someone is licensed. For this restaurant broker, who spends an incredible amount of time and money each year complying with educational requirements, paying for licenses and renewal fees and staying current in many states, it is inconceivable that others simply operate in the open without proper licensing. All listings on the We Sell Restaurants website are represented by duly licensed representatives for that state.

How do you confirm a business broker is operating legally? Fortunately, the real estate commission for each state has a simple process where you can verify licensing. I’m including links to each state below. Before you inquire on a listing for sale, take five seconds and confirm the person representing it has the legal right to do so.

What happens if you’re listed with an unlicensed broker? In my opinion, you should immediately terminate the listing. That person has no legal right to represent you and any agreement would be unenforceable in a court of law.

What if you are in contract on a listing with an unlicensed broker? Seek legal counsel. If the broker has mistakenly represented the he or she has the authority to represent your business, you may avoid paying commission. An unlicensed party to a contract making a false claim could easily void any requirement to pay on your behalf.

Lastly, if you discover a broker is unlicensed and representing a listing in a license state, take a moment and report this activity to your real estate commission. There are laws on the books to protect your community and while the real estate commission may not be swift in follow up, they will ultimately investigate any claim you file.

Confirm a real estate license for each state by clicking the link on each state below:

Robin Gagnon is the co-founder of We Sell Restaurants and a licensed real estate agent in Georgia and Florida. She is also an M.B.A. and Certified Restaurant Broker. Her firm represents sellers in forty states and has licensed brokers handling those transactions legally in all states.

 

Topics: Buying a Restaurant, Selling a Restaurant

Ten Most Popular Restaurants for Sale in February Offered by the Restaurant Brokers

Posted by Robin Gagnon on Mar 12, 2018 7:58:02 AM

 

 

February, the month when love is in the air! The We Sell Restaurants website feathing restaurants for sale was feeling the the love! Curious to which restaurants were the most sought after? Be still your heart! We've got the answers. Franchises for sale and Italian restaurants for sale trumped all other categories. What else made it to the top? Read on to find out!

Franchises for sale are always a hit on our website, and February was no different. At the top of the franchises for sale category AND overall is this sandwich franchise for sale in Austin. Wondering what made this one come out on top? Originally priced at just $45,000, the seller dropped the price by $5,000 and is agreeing to pay half of the transferCapture-36.jpg fees!

The second most popular franchise for sale on our website was this Ben & Jerry’s in sunny Florida. There’s no questioning why this listing was so popular – the Ben & Jerry’s name speaks for itself. The owner of this one is scooping up six figures to take home each year as well! Our final franchise for sale in the top 10 is this sandwich franchise for sale in Texas that qualifies for SBA lending. This business is part of a major brand that is well-known and easily recognized! It’s easy to see why these franchises for sale came out on top!

Buyers can’t get enough of our Italian restaurants for sale, and pizza restaurants for sale remain the most popular in this category. At the top of the list was Bella Nonna Gourmet Pizza in Boca Raton – it was so popular that We Sell Restaurants Franchise Partner Ken Eisenband sold it last month as well! Don’t worry, we always have the most Italian restaurants for sale on our website!

Check out this Italian restaurant for sale in Austin with a beautiful build-out. Buyers love this one for it’s beautiful build-out! Rounding out the Italian restaurants for sale category is this pizza restaurant for sale in breathtaking Boynton Beach. This one was on the hot list for buyers in February thanks to the built-in drive-thru window, not to mention the top-notch location!

Valentine’s Day must have been on our buyer’s minds, because this listing for an upscale restaurant for sale was popular last month. Not only is this beauty located in the Sunshine State, but the landlord pays for ALL the building maintenance!

This Greek restaurant for sale on Las Olas garnered the attention of lots of potential buyers! Not only is the build-out flawless, but it also features a 4COP liquor license with a value of almost $150,000.  Restaurant for Sale on Las Olas Blvd. includes 4COP Liquor LicenseSpeaking of liquor licenses, this bar for sale also made the top 10! When buyers see a 100-seat bar for sale with a lease rate that includes utilities, it’s no wonder this piqued their interest!

Rounding out the February 10 most popular restaurants for sale is this restaurant space for sale in Austin. After a $50,000 price reduction, buyers saw that they could steal this one for less than $50,000, AND it’s located in booming north Austin!

There you have it, these were the 10 most loved restaurants for sale on the We Sell Restaurants restaurants for sale website in February. Ready to buy a restaurant for sale for yourself? Click on the link below to be taken to our restaurants for sale website. Thinking now is the time to sell your restaurant? The Restaurant Brokers can help with that, too! Click here to find out more about listing your restaurant for sale!Restaurants for Sale

Topics: Buying a Restaurant, Selling a Restaurant

Tips for business owners asking the question, “How do I list my restaurant for sale?”

Posted by Robin Gagnon on Mar 8, 2018 3:19:38 PM

Restaurant owners across the country may be wondering whether they should sell or wait to sell their business. The answer depends on whether you have the skill and services of a professional restaurant broker working on your behalf. What does a professional restaurant broker do? He markets and promotes your listing to a database of prospects and seeks new buyers. He makes sure that anyone looking at your restaurant for sale meets the criteria to purchase by having available funds or equity. He ensures that your restaurant for sale name is not disclosed until a confidentiality agreement is in place.

Capture-27.jpgWhile “for sale by owner” is a tactic sometimes used in residential listings, it is not advised for when you are ready to list your restaurant for sale. Before you make the choice to sell single-handedly you should know this is a perilous process. The case for using an experienced restaurant broker couldn’t be clearer and here’s why.

The favorite word in the English language is free and that’s what a seller experiences with the services of a broker. They do the work up front to package and market the restaurant for sale with no pay off until the closing takes place. Very few business models provide full value up front with no investment by the customer. Another reason to use a professional on the job is to make sure you’re getting the most money for your business. The standard method to value your restaurant for sale relies on knowledge and skills to take apart your profit and loss statement and re-state earnings to make sure you are compensated for every dollar of revenue. An expert restaurant broker does this for a living.

Buyers looking for a restaurant for sale have to be bound by confidentiality and the broker ensures this as well as pre-qualifying them to buy. Legal documents are standard parts of their packages that are tried and true to protect sellers from buyers that want to look without buying or out of curiosity. Inexperienced brokers and owners trying to sell on their own are often tempted by those with a good story to provide the address before they are fully qualified. For the experienced broker, “no” is a way of life and that protects your business from countless damage.

Describing a restaurant for sale in glowing terms and at the same time disguising its real name and address is the experienced restaurant broker’s forte. For the inexperienced, it’s a skill that takes time to develop and for the owner trying to get their restaurant for sale sold, it doesn’t make sense to try. The marketing team at restaurant brokerage firms can write headlines to drive responses and phrase the ad to generate leads. They are a whiz at generating activity on restaurant for sale listings. All of this is free of charge to the business owner looking to sell their restaurant for sale.

Unsuspecting sellers often rely on the World Wide Web to post their restaurant for sale. This great resource is often used by brokers but inexperienced owners may have a more difficult time sifting through the inquiries to determine which are “real” versus the work of those who may have less than honest intentions. They may receive multiple inquiries from those who insist they have a buyer or others requesting financial statements. Before they know it they find their restaurant for sale is the victim of financial identity theft. Few sellers realize how dangerous it is to put their financial information in the hands of others who may then borrow against your tax ID number or use a business’s identity to get a loan against future credit card payments.

These are only a few of the reasons that listing your restaurant for sale should always involve the help of an expert restaurant broker. A broker represents your interest and guards your business as if it’s his own until the new owner is in place.

Are you interested in listing your restaurant for sale? The expert restaurant brokers at We Sell Restaurants are ready to get your business sold. Check out our website, www.wesellrestaurants.com, or click the image below to receive a free valuation of your business.New Call-to-action

Topics: Selling a Restaurant

3 Critical Points to Know About Landlords When Selling Your Restaurant

Posted by Robin Gagnon on Mar 3, 2018 4:43:20 PM

Planning to sell your restaurant? Have you already found a ready buyer? Before you get too excited, read what the restaurant brokers have learned over the years when it comes to landlords and lease assignments.

Critical Point # 1 – The Landlord is Not Your Friend – In fact, he’s now Your Enemy

In our book, Appetite for Acquisition, we devote an entire chapter to the premise that the landlord is not your friend. When you request a lease transfer however, you move into totally new waters. Not only is he not your friend; for most sellers, the landlord is now the enemy. Why is he the enemy? Think about the meaning of the term –

en●e●my (noun) a person who is actively opposed or hostile to someone or something.

At the time you are trying to exit your lease, your landlord, the same guy you have seen every month for the last several years or called up to discuss business with a dozen times is now, actively opposed to that action. Why? It’s human nature. He knows you. He’s seen you pay your rent. You’re on the hook to him for a personal guarantee and guess what – you pay him. He’s not sure the other guy will. He now wants to keep you on that lease for as long as humanly possible. You need to be smart and engage in a strategy early to stay ahead of the landlord for the lease transfer.

Critical Point # 2 – Don’t Bring a Knife to a Gun Fight

Landlords have office buildings full of legal staff and attorneys trying to figure out ways to protect their own self-interest. Just because your local rep is someone you know and like doesn’t mean he or she has anything to do with the transfer.

The landlord’s attorneys are fighting to retain you on the lease as a guarantor and fully liable, years after you leave the business. They are fighting to retain your security deposit. In some instances, they are fighting to keep from assigning the lease because it has a favorable term or rates remaining. Trying to negotiate for yourself against a pack of lawyers representing a landlord is like the old adage of bringing a ‘knife to a gun fight.” You need fire power. You need someone who will fight back for your best interest.

In most cases, the restaurant brokers are sad to tell you; that means you need to spend the money to get an attorney involved. If it costs you $3000 to get representation to fight back against a bully landlord on a personal guarantee, that is much cheaper than being on the hook for $300,000 if the person you assign the lease to goes belly up after two years.

Photographic Coffee Fact Facebook Post-1.pngCritical Point # 3 – Watch for Dirty Tricks

In the opinion of this restaurant broker, landlords are the spawn of the devil (just kidding – sort of). Landlords are now bringing on a whole new bag of dirty tricks on transfers. A lease transfer is a courtesy that we are now seeing landlords turn into profit centers. Assignment fees are sky rocketing from $1500 to $5000 per transaction. We have seen some language forcing a percentage of the sales price as a transfer fee (one client had to pay $18,000, a percentage of the sales price to transfer a lease). Many landlords won’t even do the assignment any more but pull out a “consent to assign form” which forces sellers or buyers to get the assignment drafted and have to hire an attorney. All of these dirty tricks are ways to drive up revenue for the landlord.

In many cases, they can charge what they want. Far too many sellers did not spend enough time on lease review before signing. They have agreed to terrible terms and/or payment of the landlord’s “reasonable” attorney fees without capping them. Now landlords are cashing in. They’ve figured out how to make all the money to pay those offices full of legal staff they need to fight you. Now a lease transfer document that takes ten minutes to prepare cost you $3500 to $5000 in attorney fees  to the landlord plus attorney fees on the other side to have someone protect your interest.

Recent other dirty tricks by landlords include keeping security deposits. For fifteen years we’ve seen virtually every lease assignment convey the rights to the seller’s deposit to the buyer. Then the buyer reimburses the seller at closing. Now, in alarming numbers, we’re seeing landlords demand new security deposits from buyers while making sellers fight them for return of the own.

Other dirty tricks – saying one thing and papering another. A recent transaction with a landlord in Atlanta turned up a lease assignment that bore no resemblance to the original deal terms. He delayed and delayed before providing the lease assignment at 5:36 PM on a Friday night for a Monday morning closing. He obviously didn’t think the restaurant brokers would read it over the weekend and catch his actions but he was wrong. Watch for late delivery of assignments and read them thoroughly before signing. If you need to postpone the closing, then do it. It’s too important to just accept what landlords give you.

Another recent dirty trick.  A landlord trying to collect fees from a prior assignment at a new closing. We recently did a deal with Weingarten and the prior assignment fee was unpaid. It was owed by the prior assignor. Did the current Assignor or Assignee have anything to do with the last fee? No. Of course not. Did the landlord try to hold up the transfer to get the fee? They certainly did. It took an attorney telling them they had no legal right to do so to back them down.

Selling your restaurant is an exciting time in your life. Be extra cautious in dealing with your landlord to be sure it does not turn into a long term nightmare that costs too much and leaves you with lingering liability for a lease.

Do you have stories of dirty tricks by landlords?  Reply to our blog posting. 

 

Topics: Selling a Restaurant

Restaurant Broker Steve Weinbaum has sold another franchise for sale. Most recently, Penn Station East Coast Subs in Atlanta, Georgia!

Posted by Robin Gagnon on Feb 22, 2018 4:58:19 PM

Penn Station East Coast Subs was founded nearly 33 years ago in Cincinnati, Ohio, and since it began offering its name as a franchise for sale has expanded to close to 300 locations throughout 15 states in the country. Wondering why “East Coast” is featured in the brand name? In the 80’s when the founder made a trip to Philadelphia Pennsylvania he got his hands on – you guessed it – one of the cities world-famous cheese steaks! It was love at first bite and he took the concept back home to Ohio and began selling his take on the classic out of his own deli. Just as it was in Philadelphia, it was a success in Ohio. So much of a success that he started Penn Station East Coast Subs in 1985.

The Penn Station East Coast subs that was listed by the Restaurant Brokers as a franchise for sale is the sole Atlanta location for the brand. The original owner, Joe Quattro, operated this location for three years before calling upon We Sell Restaurants to list his franchise for sale. Any time we have a franchise

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 for sale it garners the attention from numerous buyers, and this franchise for sale was no exception. Nearly 60 buyers contacted us expressing interest in this franchise for sale!

In the end, Shiraz Surani came out on top and scooped up this franchise for sale in Atlanta. Originally, Surani was interested in a coffee shop or restaurant for sale, but when he saw the numbers this franchise for sale was doing and the location it was in, he knew it was too good of a deal to pass up! Not only was he scoring an open and operating franchise for sale saving him thousands on a build-out, he was also getting everything that comes with purchasing an existing franchise for sale – in this case that was dozens of positive online reviews, an unheard of low royalty percentage, and training from the seller and the corporate office!

If you are in the market to buy a franchise for sale, click the link below to see all the franchise for sale listings that We Sell Restaurants has to offer across the country. Do you currently own a franchise that you are ready to sell? The Restaurant Brokers have you covered! Give us a call today at 404-800-6700 to speak to one of our customer service representatives about what our Restaurant Brokers can do to help you get your franchise for sale sold! Who knows, maybe your franchise for sale will be the next business showing up on our sold list – and we may be writing about you!

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Topics: Selling a Restaurant

Restaurant Broker Dave Duce Sells Neighbor's Kitchen

Posted by Robin Gagnon on Feb 4, 2018 10:01:43 AM

One of the first restaurant for sale transactions closed in the New Year by We Sell Restaurants was in Austin Texas. Neighbor’s Kitchen, a full service iconic store in a gorgeous landmark location is now under new ownership. The buyer, Thomas Dickey is an Austin native excited to acquire this full service iconic store featuring both multiple patios and live music.

The Neighbor’s Kitchen has a huge physical plant, with a series of decks and extensive grounds going down to a river. It is in the lifeblood of an historic town, a fast-growing bedroom community of Austin that is the tenth fastest-growing city in Texas. All of these were reasons for this restaurant buyer to make a decision to buy the restaurant which was on the market and viewed by a number of buyers.

The sellers were a partnership and were ready for a new opportunity. Their highly successful business was operated on an absentee basis and delivering a strong return. The live music scene in Austin Texas is booming and this location brings in local and regional bands to play on two different stages.

The river setting, live music, and good food were all part of the reasons this location offered by Certified Restaurant Broker Dave Duce was a hot listing.  Online reviews for the business number in the hundreds. Their online fans say,

“Great food! Friendly staff! Great atmosphere! Unique and one of a kind place. Love the options for live music and the local and national talent they bring in.”

“Great location and setting. Super friendly staff and delicious food. My second time coming here and my family and friends all love it too.”

“Love it. Love the atmosphere (apparently it's a rather ancient--for the Americas--building, one o

f several moved to this area) and the food doesn't disappoint. I love IPAs and they've got two (though I need to call Bell's about their Two-hearted...I just don't know if that's an IPA...), including Stash, and a handful of other craft and local beers. Plus the usual suspects. Great, friendly staff and nice indoor and outdoor seating options. Over the years I've watched football here and brought the family, met with friends and just hung out solo chatting with strangers. It's good for all of that. :)”

With these types of reviews, it’s no wonder the buyer plans to keep the concept the same. He will be hands on in the business and looks forward to interacting with customers.

For information on selling your restaurant, click the image below.

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Topics: Selling a Restaurant