Restaurant Broker Dominique Maddox of EATS Broker sells Jimmy John’s franchise
Restaurant Broker Dominique Maddox of EATS Broker sells Jimmy John’s in Benbrook, Texas. EATS Broker represented the seller and buyer for this transaction.
The buyer is a multi-unit owner expanding his territory and ownership in Jimmy John’s. The new ownership group takes over a successful location with sales of over $840,000 in 2022. The seller was an absentee owner ready to exit the business.
Benbrook, Texas, is located in the southwestern corner of Tarrant County, Texas, and a suburb of Fort Worth. Benbrook, Texas, is experiencing growth in the surrounding area. The city of Benbrook is currently contracted to build 10,000 homes and one apartment complex, all within the delivery area of this location.
Texas Restaurant Broker Dominique Maddox says, “the sellers were initially trying to sell their restaurant For by Owner. They eventually decided to hire a Restaurant Broker and allowed my company to get their franchise restaurant sold.
EATS Broker received a 5-star Google review that says, “He went above and beyond at all times. Would highly recommend”. This marks the 12th 5-star Google Review the Restaurant Broker at EATS Broker has received.
Jimmy John’s is an American sandwich chain headquartered in Champaign, Illinois. The business was founded by Jimmy John Liautaud in 1983.
For more information on the restaurant market and other available consulting services or a complimentary restaurant valuation, contact Dallas Restaurant Broker Dominique Maddox at 404-993-4448 or email at sales@eatsbroker.com. Visit our website at www.EATSbroker.com
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Preparing to Sell a Restaurant-What you Should Know
The decision to sell a restaurant is the first step and figuring out how to sell a restaurant is the second step. When preparing to sell a restaurant, what should you know before starting the process?
Baby boomers at record numbers are planning to retire and want to sell a restaurant. The preparation to sell a restaurant can start a year in advance, but mostly it happens unplanned or forced to happen.
What makes a restaurant for sale listing attractive to buyers? EATS Broker explains the key factors that make restaurant for sale listings stand out from the crowd.
What makes an excellent restaurant for sale listing?
- Does the restaurant make a profit?– Profitable Restaurants have a greater chance of being sold than unprofitable restaurants. Only 20%-30% of restaurants listed for sale on www.Bizbuysell.com are sold. Restaurants for sale that show a profit stick out from the crowd and make themselves attractive to buyers.
- Has an excellent Restaurant Story– Part of branding for a restaurant is being able to tell the restaurant’s story. The largest Franchise brands in the world make sure that people understand the company’s story.
The Dallas Restaurant Brokers says, “The restaurant’s story is vital to a company’s success. People relate to stories and remember stories. Independent-owned restaurants need to do a better job of telling the restaurant story. I suggest that any restaurant focus on the following points:
- How did the restaurant get started?
- Family-owned business?
- Where did the recipes come from?
- What makes the restaurant different than other restaurants?
- How is the cooking method different?
- Can anybody operate? When selling a restaurant, it should be set up where anybody can handle the restaurant. Several Corporate America refugees are entering the restaurant industry, and most don’t have restaurant experience. How can you sell a restaurant to an individual that doesn’t have experience?
- Create systems and templates
- The restaurant should be easy to operate
- If the restaurant is a Chef-driven concept, make sure to have a Sous chef and replacement chef for the next owner
- Provide training to the new buyer
To learn more about EATS Broker consulting services or to receive a complimentary restaurant valuation, contact Texas Restaurant Broker Dominique Maddox at 404-993-4448 or by email at sales@eatsbroker.com. Visit our website at www.EATSbroker.com.
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3 Biggest Mistakes Restaurant Sellers Make
The biggest mistakes restaurant sellers make are simple issues that can be addressed before a restaurant is listed for sale. The mistakes are based on facts, books, and records and lack of understanding of selling a restaurant.
Dallas Restaurant Broker Dominique Maddox says, “ the small details in the process to sell a restaurant make all the difference at the end. The lack of attention to the facts or books and records will make buyers not interested in buying the restaurant for sale.
The Restaurant Broker at EATS Broker listed out the Biggest Mistakes Restaurant Sellers Make:
- Leaving out the essential facts:
-Ownership of Furniture and Fixtures- what items are leased or owned by the landlord?
-UCC liens that can stop the sale of the restaurant and have to be paid before closing
-Filed tax returns that don’t match the profit and loss statements provided to Broker or buyer
-Restaurant upgrades that are required by Franchise( only applies to franchise restaurants)
-Behind on rent payments
- Clean Books and Records
-Sales Tax Filings don’t match Profit and Loss Statements
-Has two sets of books-provides different copy to IRS and provides the buyer with the accurate numbers
-Does not have a Profit and Loss statement to provide
-Slow to provide updated numbers
-Lack of clean books and records will not qualify for SBA bank lending
-Lack of transparency builds distrust in the buyer
- Not realistic about the selling a restaurant process
-Unlike residential sales, it can take 6-8 months to sell a restaurant
-Only 30%-40% of all restaurants for sale listings will actually sell to a new owner
– Everything is negotiable when it comes to price-need to be flexible
-Only 2% of buyers on the market looking for a restaurant for sale will buy; it can take multiple interested buyers before the actual buyer is found.
To learn more about EATS Broker consulting services or to receive a complimentary restaurant valuation, contact Dallas Restaurant Broker Dominique Maddox at 404-993-4448 or by email at sales@eatsbroker.com. Visit our website at www.EATSbroker.com.
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Selling a Restaurant: What Documentation is needed?
When selling a restaurant, what documentation is needed from the seller? The answer is simple it depends on what type of sales transaction. Trained Restaurant Brokers use two methods when providing a Restaurant Valuation to a seller.
The most profitable and best way to sell a restaurant is based on past Profit and Loss Statements and Tax Returns. If these documentations are not available, the restaurant should be priced as an Asset Sale, meaning pennies on the dollar for the equipment and build-out.
EATS Broker breaks down the essential documentation needed for both types of transactions. We list the documentation that is provided during the due diligence period for the buyer:
Selling a Restaurant Business Based on Tax Returns and Profit and Loss Statements:
– Tax Returns for the past three years
– Profit and Loss Statements for past three years
– Copy of Lease and all amendments
– Sales Tax Clearance Letter
– POS Sales Report
– Bank Statements (sometimes)
– Balance Sheet
– Copy of Franchise Royalty Report
– Equipment List (only items owned by the seller)
– Franchise Agreement
– Sales Tax History
Selling a Restaurant priced as an Asset Sale:
– Sales Tax Clearance Letter
– Copy of Lease and all amendments
– Equipment List
– Limited Profit and Loss information
– Sales Tax History (sometimes)
– Bank Statements (sometimes)
Providing documentation for a successful and profitable business net the seller the highest asking price, can qualify for a restaurant for bank lending and attracts more buyers. Asset Sale is harder to sell and makes the Restaurant Broker work for their commission.
Asset Sale can be a challenging sale because you sell the opportunity or potential to a new buyer. You can tell when a restaurant is listed as an Asset Sale because Cash Flow and EBITDA will be low or nonexistent.
EBITDA, or earnings before interest, taxes, depreciation, and amortization, is a measure of a restaurant’s overall financial performance.
Dominique Maddox of EATS Restaurant Brokers says, “selling a restaurant business has two phases for a restaurant owner. First providing the documents needed for a valuation. Second, providing more detailed supporting documentation during the buyer’s due diligence period”.
Some restaurant owners can be frustrated and think they provided enough financial information during the valuation phase for buyers to confirm their numbers. This thinking is usually incorrect, and most buyers will ask and want to see more additional supporting documentation before arriving at the closing table.
For more information on the restaurant market and other available consulting services or a complimentary restaurant valuation, contact Dominique Maddox at 404-993-4448 or by email at sales@eatsbroker.com. Visit our website at www.EATSbroker.com
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Why You Can’t Sell Your Sell Restaurant?
Have you ever wondered why you can’t sell your restaurant? It’s a fact only about 30%-40% of restaurants for sale listed under 1 million dollars will transfer to new buyers via a sales transaction.
Buying an existing restaurant for sale can be a quick approach to become a restaurant owner. This approach eliminates some of the difficulties of starting a new restaurant.
Today restaurant for sale market is unique and selective compared to the number of restaurant listings for sale last year before the Covid pandemic. Some states have seen the number of restaurant listings for sale decreased by 20%-40% or more.
Unlike the residential market, where it’s a seller’s market, it’s a buyer’s market in the restaurant brokerage industry. The number of buyers in the market looking for restaurants for sale far outnumbers the number of sellers willing or able to sell.
There is an old saying In the Restaurant Brokerage Industry of “there are no bad restaurant listings for sale; they are just not priced correctly.”
Selling a restaurant can be a process that takes 6-9 months before a transaction is complete. Most Business Brokers or Restaurant Brokers require listing agreements of 6-12 months.
There are several reasons why a restaurant doesn’t sell;
EATS Broker has created a list of the most commons reasons:
1. Overpriced Listing– This is the obvious way to keep a restaurant from selling. It’s an emotional challenge for restaurant owners to put a monetary value on their restaurant. The value should be based on the Tax Returns or priced as an Asset Sale.
2. Bad Books and Records– The Tax Returns and Profit and Loss statements tell the story about a restaurant’s financial success or failures. The majority of buyers are only interested in verifiable sales numbers.
Restaurant Owners leave a lot of money on the table when they manipulate their books and records to pay the IRS less in taxes. This approach hurts when it’s time to sell the restaurant and impress the buyers.
3. Lease Terms– In some cases, the lease terms can make the restaurant more attractive or less attractive to new buyers. A majority of restaurants for sale under 1 million dollars will involve a lease assignment or transfer. This means the landlord will approve the new tenant, and they will be responsible for the lease terms agreed upon by the restaurant seller.
EATS Restaurant Brokers provides-ISSUES TO CONSIDER WHEN EVALUATING A LEASE
Commercial leases can have various rent structures that can make it challenging for a restaurant owner to sell a restaurant.
-Rent Structure- can range from a Net Lease, Single Net Lease, Double Net Lease, or Triple Net Lease (NNN Lease. Landlords can also add verbiage for a percentage of sales.
-Yearly Increases
-Stipulations on Lease
-Lack of Option Years
-Landlord Financial Requirements
-Common Area Maintenance(CAMS) yearly increases.
-Landlord owns the equipment
4.Seller unrealistic with listing– Today’s restaurant sellers have to be realistic when it comes to the resale market. Some restaurant owners expect their restaurant to be sold in a month. Some restaurant owners want to price their restaurant at 4x-5x earnings.
Today’s restaurant owners that want to sell have to be willing to negotiate and be flexible.
5. Lack of Financing-All restaurants for sale do not qualify for bank lending, and a majority of buyers can’t pay a 100% cash price.
It’s a known fact that restaurant owners that offer owner financing get a higher asking price from a buyer. This option does come with a certain amount of risk for a restaurant owner, but it does allow more buyers to qualify financially.
For more information on the restaurant market and other available consulting services or a complimentary restaurant valuation, contact Dominique Maddox at 404-993-4448 or by email at sales@eatsbroker.com. Visit our website at www.EATSbroker.com.
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How do you write a letter of intent for a lease
How do you write a letter of intent for a lease is a struggle for inexperienced brokers representing clients or unrepresented potential tenants? Once a potential tenant finds a commercial lease space, the process to negotiate with the landlord begins.
A letter of intent (LOI) is a document declaring one party’s preliminary commitment to do business with another. The letter outlines the key points of a deal that will be negotiated between all parties involved.
LOIs are useful when two parties, usually landlord and potential tenant, work together to hammer out the broad strokes before resolving the finer points.
Letter of Intents can be drafted and presented by either party. The receiving party can accept the terms or redline and revise the words to send back to the original sender.
Key Points on a Letter of Intent Include:
- Tenant Improvement Allowance (TI)
- Rent Abatement
- Personal Guaranty
- Rent structure
- Term of Lease
- Options to extend
- Permitted Use/Exclusive Use
- Rent Commencement Date
- Landlords Delivery Condition
- Lease Assignment Rights
- Security Deposit
- Advanced Rent
- Repairs and Maintenance
- Brokerage Disclosure and Commission
Dominique Maddox, a Restaurant Broker and Founder of EATS Restaurant Brokers says, “the letter of intent is an essential part for a potential tenant to address all concerning issues before signing a new lease.
Landlords pay lawyers to draft leases that protect all their concerns. In this business, I always say the landlord is not your friend. Potential tenants need to have a professional on your side when negotiating the lease”.
EATS Brokerssuggest hiring a professional Business Broker or Restaurant Broker to review the following items on a Letter of Intent (LOI):
- Personal Guarantees- how long will the tenant be a personal guarantor.
- Exclusivity-does the tenant have any protection from incoming tenants competing with their cuisine.
- Covenants, POA rules, and regulations
- Zoning issues
- Subordination
- SBA leases
- Renewals- Provides information on renewals and rates.
- Non-Disturbance
- Dispute resolution
The detailed information to consider when evaluating a new lease can be overwhelming to an inexperienced restauranteur or real estate professional. Most landlords hire property management companies to negotiate new leases. These hired professionals’ job is to get the landlord the best deal possible.
To all potential tenants, remember when you call the “For Lease” sign on a vacant restaurant space, you are letting the landlord know you are representing yourself in lease negotiations.
For more information on restaurant leasing and other available consulting services or restaurant valuations, contact Dominique Maddox at 404-993-4448 or by email at sales@eatsbroker.com.
Visit our website at www.EATSbroker.com
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Day in a Restaurant Broker’s Life
What does a Restaurant Broker actually do daily? Dominique Maddox, Founder and President of EATS Broker share his thoughts about the Day in a Restaurant Broker’s life.
I wrote a blog last year about my daily activities by the minute as a Restaurant Broker that received great interest and replies. I have decided to start a series of blogs about some of my most exciting days as a Restaurant Broker. This blog covers a day where I drove 900 miles round trip in a day to visit four potential restaurant listings and two restaurant owners.
I was super excited about the potential to get four restaurant listings, and one of the restaurant owners operated three locations. My Day was planned out the night before with an 11am face to face listing appointment in Jasper County in South Carolina.
After my 11am scheduled appointment, I was scheduled to meet the restaurant operator of three locations in Florence County, SC, at any time because he would be working that day. His restaurants were located in three different cities. My strategy was to visit all his locations before I met with him in Florence County.
Let’s see how this goes:
4:00 am – Wake up and put on a pot of coffee, and drink water. Review my Cash Scoreboard with my to-do list for the Day. Add any items that come to mind.
4:15 am- 4:30 am – Pack snacks, candy, and energy shots for the day trip. Kiss my wife good-bye, say a quick prayer, and I’m in my car on the way to Sumter County, SC.
4:30 am- 4:45 am- I drive my wife’s car on my long road trips to visit customers. As usual, when I take my wife’s car, her gas is empty, so before I can really start my road trip, I stop for gas. The 1st restaurant location is 290 miles away from my home.
7:45 am – 8:00am- First stop of the Day to refuel the gas, respond to customers’ emails, stretch, and grab some Bojangles for breakfast.
8:30 am- Arrive at 1st restaurant location. I take notes about the restaurant’s appearance related to street visibility, the shopping center’s condition, lease vacant spaces, and other tenants in a shopping center. The restaurant is not open, so I can only look thru the window.
8:45 am- Jump back in the car to make my way towards my 11am scheduled face-to-face meeting with a restaurant owner located 145 miles away.
10:45 am- I arrive early in the surrounding area to drive around to have a better feel for the location. I take notes on the surrounding competition, businesses, residential properties, and the appearance from the outside.
11:00 am – 12:00 pm- Meet with the single unit owner. They would like to sell to relocate outside of the state. I educate them on the current restaurant resale market, provide a restaurant price valuation, and review the lease.
12:15 pm- Respond to buyer inquiries from my car, finalize my notes from my meeting, and input location three in the Waze App. I’m headed to the 2nd restaurant of three owned by the restaurant operator in Florence County, located 165 miles away.
2:45 pm – I arrive at the restaurant, and instantly I’m impressed with the beautifully built restaurant with a drive-thru. I was impressed with the street visibility and design of the restaurant. It was a fantastic improvement from the seller’s first location in Sumter County.
3:00 pm- I take a couple pictures of the restaurant building, outdoor signage, patio space, and drive-thru window. Finalize my notes from my car and head towards the face-to-face meeting with Restaurant Owner 2; the location is 25 miles away.
3:30 pm- I arrive at destination number four. During my ride, I was thinking about the difference between the owner’s two locations. I thought about the Pros and Cons of both places. I was ready for my face-to-face meeting. By this point, I had driven 625 miles in the Day.
3:45 pm – I walk-in a restaurant, and instantly, I’m impressed with the restaurant’s layout, bar area, and stand-alone building. I ask for the owner, grab a menu and take a seat.
The management team lets me know he is not there. I sit down and look at the menu order food. My food arrives, and it’s delicious, but the owner has not arrived yet.
4:15 pm – I start to get nervous, and doubt starts to kick in. I made the cardinal sales professional mistake; I didn’t confirm the scheduled meeting the night before with the owner. I sent a text and get no response.
4:30 pm- Management team members come over and let me know the restaurant owner will not make the meeting.
4:45pm – Disappointed, I get back in my car and start my journey home, located 300 miles away.
5:15pm – The Owner calls to apologize for missing the scheduled meeting. We talk on the phone for about 30 minutes (I have Bluetooth). He agrees to send his Profit and Loss statements to me via email to provide him a restaurant valuation for all three of his restaurants.
9:15 pm- I finally arrive at home after driving over 900 miles. I was mentally tired, my body ached, and my stomach was empty. I was lucky because my wife had dinner ready.
I returned home with zero signed listing agreements. Most would think my trip was unsuccessful, but I feel different.
I was able to show my potential listing clients I will go the extra mile to provide exceptional customer service. I was trying to show Restaurant Owner 2 that I’m not a Broker that will just sit in an office and rarely visit clients at their restaurants,
EATS Restaurant Brokers commits to visiting potential clients within a 300-400 miles radius if needed to get a deal done. We can sell restaurants in Tennessee, South Carolina, North Carolina, Alabama, Texas, Kentucky, Missouri, Louisiana, Virginia and Georgia.
Thinking about selling a restaurant contact EATS Broker. For more information on the restaurant market and other available consulting services or restaurant valuations, contact Dominique Maddox at 404-993-4448 or by email at sales@eatsbroker.com.
Visit our website at www.EATSbroker.com
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Selling a Franchise Restaurant vs Non-Franchise
What are the Pros and Cons of Selling a Franchise Restaurant vs. Non-Franchise is a common question EATS Restaurant Brokers receives from sellers? Franchise Restaurants for Sale make up 60%-70% of all restaurant sold listings annually. Why is the number so high compared to independently owned restaurants?
The hard facts are only 30%-40% of restaurants listed on the for-sale market will get sold to new buyers. Why does a Franchise Restaurant have a better chance of being sold than a non-franchise restaurant for sale?
EATS Broker discuss the Pros and Cons:
Pros:
- Trade Name: Franchisees have the right to use an established trade name, marks, logo, and goodwill. Buyers are generally knowledgeable about the concept and menu.
- Restaurant Valuation: Franchise Restaurants usually get a higher price valuation.
- Franchise Business Consultant: New buyers are assigned a Consultant from the franchise brand to receive additional training and support.
- Books and Records: Franchise Restaurants are known to have better books and records to provide to buyers. Franchise concepts typically require Franchisees to have updated POS sales systems.
- Landlord Approval-: Landlords, are most comfortable approving restaurant concepts for lease spaces. Occasionally lease assignments will have guaranteed landlord approval for franchise concepts.
- Bank Lending: Banks view franchise restaurants as less risky loans compared to an independently owned restaurant. The approval process, at times, can be quickly done.
Cons:
- Franchise Fee: Initial Franchise Agreement Fee ranges from $20,000-$100,000+ depending on Franchise. When a restaurant transfers to a new buyer, a transfer fee is generally required, usually up to 50% of the Franchise Agreement fee.
- Royalty: This operating fee is calculated based on Gross sales ranging from 3%-10% (it could be higher).
- National Marketing Fee: Required fee each franchisee pays to the franchisor to help with the franchise marketing cost. Expenses can range from 0%-6%.
- Remodel Cost: Franchises require locations to date on current specs before a sales transfer can take place to a new buyer. Restaurant remodels cost can be prohibitive depending on the Franchise’s current location requirements. Required upgrades can range from updated tables, chairs, signage, POS system upgrade, lighting, and cooking equipment.
- Required Training: New franchisees are required to complete a certain number of hours working in the restaurant before a buyer can achieve a sales transfer. This process from start to finish can range from 2 weeks-3 months.
- Franchise Approval: Buyers have to get approved by the Franchise.
- Vendors: Franchises have a list of preferred vendors that the franchisees must use.
Independent Owned Restaurant for Sale
Pros:
- No Royalty: Buyers are not required to pay 3%-10% to any franchise; this could equal hefty savings yearly.
- No Required Training: The buyer can schedule training with the seller, but a certain number of hours working in the new buyer’s business is not required to complete the transaction.
- Time to close: Once the buyer and seller agree to terms on an Asset Sale purchase and the landlord approves the new buyer, the deal can close. One of the most significant advantages of non-franchise sales is the lack of time to complete this deal. Instead of 2-4 months to close on a franchise concept, a buyer can close on a non-franchise restaurant in 2-4 weeks.
- Remodel Cost: Sellers are not required to do any upgrades unless buyers request.
- National Marketing Fee: Buyers are not required to pay an automatic marketing fee to anyone.
- Freedom: Have the ability to make changes with getting franchise approval. Owners have the freedom to choose their vendors.
- Local: Customers like to support local restaurants that are not national franchise concepts.
Cons:
- Restaurant Valuation: Normally are lower than Franchise concepts. Unless the restaurant has good books and records, goodwill, and has been open and established for years.
- Training: New buyers are on their own to learn the concept, operations, employees, and marketing. The buyer usually completes no formal training before or after the sale transaction.
- Trade name: Building up the trade name is 100% the responsibility of the operator. The new owner has to maintain or establish a new identity for the restaurant.
- Books and Records: Keeping updated and accurate books and records can be challenging for non-franchise concepts.
- Landlord approval: Landlords will frequently do more due diligence on a non-franchise concept before they approve a lease assignment. From the landlord’s standpoint, it is riskier to approve a non-franchise compared to a franchise concept.
Franchise Restaurant ownership and independently owned restaurants have tons of pros and cons to consider when buying a restaurant.
EATS Broker are Subject Matter Experts in Restaurant resales. Let us provide you a complimentary Certified Restaurant Valuation; contact us today at sales@eatsbroker.com or 404-993-4448.
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What do Restaurant Business Brokers Do?
Restaurant Business Brokers are more similar to a quarterback on a football team than most people think. Restaurant Brokers are the quarterbacks for the sale process. Quarterbacks are known to be some of the smartest people on the team. A team that has a great quarterback has a competitive edge over another group.
Restaurant Business Brokers are responsible for coordinating all the various aspects of the restaurant sale. Restaurant Sales can be more complicated than residential real estate sales or general business brokerage. Remarkably similar to a quarterback position being a specialized position, it takes Restaurant Brokers years to specialize in the minor details of Restaurant Brokerage.
Dominique Maddox, a Restaurant Broker and Founder of EATS Broker, says, “a Restaurant Broker and a Quarterback have to be leaders for the team.” To get a Restaurant listing to the closing table, it takes a team effort’. The more complex the deal gets, the more team members will be added.
Nobody wants the deal to get to the closing table more than the Restaurant Broker. A good Restaurant Business Broker should be able to call an audible if he or she notices the deal is falling apart”.
Facts about a Quarterback:
– Playing a Quarterback is the most demanding position on the field.
– Has to know all the responsibilities for every player on the offensive
– Has to understand how the defense is trying to stop them from scoring
– Has to be able to call audibles if play will fail
– Quarterbacks can be expensive; they usually are the highest-paid player on the team
Facts about a Restaurant Broker:
Specializing in selling restaurants is a tough business; over 60% of Restaurant Brokers will fail within the industry in the first two years.
– Has to know the role of every individual or professionals involved in the deal
– Experienced Restaurant brokers should understand items that could affect the deal from closing.
– Most deals require written amendments to get the deal closed; a Restaurant Broker needs to know when to call an audible to save a deal
– A good Restaurant Broker should contact the lawyers, accountants, landlords, lenders, buyer, seller, and closing attorneys throughout the sales process.
– Restaurant Brokers usually charge 10%-15% or a minimum commission of $10,000
EATS Brokerunderstands the importance of running the offense to score a touchdown and get everyone paid at the closing table. Interested in selling your restaurant? Don’t just hire any Broker; hire a quarterback to get your restaurant sold.
For more information on the restaurant market and other available consulting services or restaurant valuations, contact Dominique Maddox at 404-993-4448 or by email at sales@eatsbroker.com. Visit our website at www.EATSbroker.com
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How to Sell a Franchise Restaurant?
The decision to sell a franchise restaurant can be challenging in today’s market. The good news is that if you own a Restaurant Franchise, buyers are lining up with interest. Close to 60%-70% of the restaurants for sale in Georgia that sell are franchise concepts.
Franchise concepts are growing right now, while independent owned restaurants are declining. Franchise Restaurants are popular because they come with a proven system, support, business model, logo, IT support, and reputation.
When it is time for a Franchisee to exit the business, they have a couple of choices on how to sell their restaurant. One of the most significant considerations when selling a franchise restaurant is, do I sell to a current franchisee? Or do I sell to a non-franchisee?
Dominique Maddox, a Restaurant Broker and Founder of EATS Broker says, “ selling a franchise restaurant to a current franchisee is much different from selling to a new franchisee. Current franchisees understand the brand; new franchisees need much information to educate them on the Franchise Brand, process, qualifications, training, and closing process”.
Who do you sell your restaurant to, a current Franchisee or a Non-Franchisee? EATS Broker discuss the Pros and Cons:
PROS Selling to an existing Franchisee:
-Dealing with an educated buyer about the franchise
-Has already been approved by the franchise
-The capability of closing a deal fast because they don’t require the standard 4-6 weeks training.
CONS of Selling to a current Franchisee:
-They usually undervalue the business
– They understand the operation of the franchise brand
-They are harder to impress
-It can be challenging for them to get financing
PROS Selling to a Non-Franchisee:
– Can get a higher offer price
– They are excited about the new opportunity
– Usually are not experienced, restaurant owners
– Can sell them the opportunity for growth or proven sales numbers
CONS Selling to a Non-Franchisee:
– Lots of education about the buying process is needed
– Have to get approved by Franchisor
– Have to do the required training before a new franchisee can complete the sale. Training process is usually 4-6 weeks
– Closing process can take 2-4 months
Thinking about selling a restaurant contact EATS Broker. For more information on the restaurant market and other available consulting services or restaurant valuations, contact Dominique Maddox at 404-993-4448 or by email at sales@eatsbroker.com. Visit our website at www.EATSbroker.com
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