Restaurants for Sale By Owner Opportunity or Risk?

Posted by Robin Gagnon on Feb 28, 2012 7:30:00 AM
It's harRestaurant for sale by ownerd not to be attracted to a for sale by owner restaurant opportunity. You might think that you'll be getting a better deal because you're working directly with the owner and not having to involve any third parties. However, there are quite a few risks that you need to consider. 

The first, and most important, is that there is a conflict of interest by the seller by default.  Restaurants for sale by owner are exactly, that - for sale by owner.  The seller is not an impartial third party so you won't be getting an objective view about the viability of the restaurant, whether any major problems are present, or many other issues. The owner is also most likely not knowledgable about every step in the selling process. You don't want to get in to a situation where the owner is unable to transfer the business to you because he simply doesn't know how to. Even worse, you might not fully own the equipment or other essential items of the restaurant. 

Without a third party looking through the entire contract, you could run in to a situation where you are making missteps on your part as well. Expert advice is invaluable in this situation, even if you have purchased for sale by owner restaurants before. A third party also acts as a mediator between the two parties, so that the potential deal does not get sidetracked due to emotional involvement. 

Overall, you are going to have a much easier time purchasing a restaurant through aknowledgeable restaurant broker instead of dealing directly with the owner. In many cases, you'll be paying less as well. Restaurant owners may think their business is worth far more than it truly is. 

Topics: Buying a Restaurant

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