Hiring Restaurant Brokers – What to Ask Before You Sign

Posted by Robin Gagnon on Jan 16, 2012 2:39:00 PM

Unfortunately for buyers, restaurant brokers do not come with a warning label.  That means you have to do your own research to separate the average from the outstanding restaurant brokers.  Ask these ten questions before making a decision.  

1)      How long have you been selling restaurants?  Restaurant brokers with experience are always preferable to those just learning to broker businesses.

2.   What was your business background before you started selling restaurants? The best restaurant brokers are those with a financial background like banking or accounting. 

3. Are you licensed?  Only fourteen states require a valid real estate license to act as restaurant brokers and these are subject to change.  Verify the status of their license online at the state real estate web sites.  You wouldn’t hire an unlicensed electrician; why would you hire an unlicensed person to represent you?  

4. Do you have references or testimonials for restaurant buyers and sellers you’ve worked with in the past? Most restaurant brokers post this on their Web site.

5. What is your educational background? It’s not a requirement that restaurant brokers have a formal education to sell businesses, but given the choice between someone with an MBA and someone that didn’t complete trade school,  who do you think will bring the most to the table in financial due diligence?

6.  How many restaurants for do you have now and how many restaurants have you actually sold?  Getting a listing and having experience in selling restaurants are two different things.  

7. Do you have prepared contracts for purchasing a business?  The answer here should be yes, as you don’t want to pay an attorney to develop a contract for your purchase.

8.  What other resources do you have available to assist me in the purchase of a restaurant? Strong restaurant brokers have contacts and resources for construction, insurance, liquor licenses, and all the other items that can surface after the sale. 

9.  Do you belong to any state organizations? Most states have strong organizations for restaurant brokers. A competent professional is probably a member.  The business brokerage associations generally include an ethics component and experience or education requirements to join.

10.  Do you belong to any national organizations? The IBBA, or International Business Brokers Association, is one of the largest in the industry. Qualified restaurant brokers are generally members.

Even though restaurant brokers don’t come with a warning label, having the answers to these questions can help you make a decision about the best choice for aiding you in buying a restaurant.

Topics: Restaurant Brokers

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