Selling your Restaurant may mean putting some materials together first. Here’s a checklist of what most Restaurant Brokers will need to make sure you put your best foot forward! There are limited buyers for the best restaurants for sale so be sure they get the best impression of your business.
It’s all in the name. Selling your restaurant won’t happen without both the legal name of the selling entity and the business name (including the store number if it’s a franchise location). Make sure your Restaurant Broker also knows what type of structure you operate your business under, whether it’s an LLC, C-corporation or Sole Proprietorship. Expect an experienced broker to check the status of your legal entity with the Secretary of State before listing. A corporation that’s defunct will keep a transaction from moving forward.
If you are selling your restaurant franchise, you have some extra items to pull together including:
- Remaining number of years on the franchise agreement
- Royalty percentage
- Marketing Fee percentage
- Transfer fee amount
- Franchise training time period and understanding of whether this occurs before or after closing.
- Date of any required refresh or remodel of the store and estimated cost.
- Copy of the franchise agreement.
Do you have to tell your brand you are selling? Most franchise agreements state that you provide a “right of first refusal” and notification to the brand prior to listing. In reality, most owners skip this step until and unless it’s placed in contract. You should be clear on the process for transfer and understand who in the corporate office will assist in approving the new buyer.
Make sure the restaurant broker knows how to reach you including your cellphone, email address and any other information to provide up to the minute results on listing activity.
For the store itself, be prepared to provide information on employees (the number of full time and part time), a sample schedule and rates of pay. For the business, buyers and restaurant brokers want to know the operating hours, how long it’s been established and how long you, as the seller have owned it. They will also need to know the number of seats both inside the business as well as patio seating.
Infrastructure is key to selling your restaurant and a key component of what you are transferring. Make sure you understand the size of your hood and grease trap along with the age and condition of any heavy equipment like the HVAC system, coolers or freezers.
Selling a restaurant may seem intrusive in some regards. Buyers definitely want to know your reason for the sale. Be prepared with a response on why you are selling your restaurant whether it’s burnout, retirement, relocation or simply a change in lifestyle.
When it comes to the lease, buyers want to see a physical copy. Either scan your original or ask your landlord for an electronic copy. They will want to understand the escalations as well as any option years. When quoting the rent, make sure you include Rent plus CAMS, taxes and insurance. Your restaurant broker will also need contact information for your landlord as well.
It is critical that you provide up to date financial information when selling your restaurant. Buyers are looking at the cash flow to make a purchase decision. For lending, that means two years of tax returns plus the current year profit and loss statement.
Decide up front, when selling your restaurant, exactly what will transfer. Will your famous cookie recipe be included or not? What about the picture of your family over the fireplace? If something is not included, pull it from the restaurant so you don’t have to explain that choice to buyers.
Lastly, do some local research and figure out key economic factors that make this a winning location or opportunity for someone one.
Selling your restaurant is easy if you follow this simple checklist and provide your restaurant broker all the information he or she needs. You can download our restaurant selling checklist at this link or contact us to sell your restaurant.
Robin Gagnon, Certified Restaurant Broker®, MBA, CBI, CFE is the co-founder of We Sell Restaurants and industry expert in restaurant sales and valuation. Named by Nation’s Restaurant News as one of the “Most Influential Suppliers and Vendors” to the restaurant industry, her articles and expertise appear nationwide in QSR Magazine, Franchising World, Forbes, Yahoo Finance, and BizBuySell. She is the co-author of Appetite for Acquisition, an award-winning book on buying restaurants.