sell a restaurant Tag

Closing Attorneys for Restaurant Sales Transactions

Closing Attorneys for restaurant sales transactions are an essential part of the selling a restaurant process. Closing Attorneys act as neutral third parties in the transaction. Since they don’t represent either buyer or seller, as an attorney would.

Closing Attorneys are known by multiple names like Escrow agents and Real Estate attorneys. The Closing Attorney’s job is to ensure a smooth closing transaction, UCC-1 lien search, and wire closing proceeds to all parties.

Dallas Restaurant Broker Dominique Maddox says, “picking an experienced Closing Attorney that understands the Asset Sale Purchases is extremely important. Yes, you can close a deal without a Closing Attorney but EATS Broker always recommends a buyer to use a trusted Closing Attorney”.

Duties of a Closing Attorney
– Hold escrow deposit, and disburse closing proceeds to all parties
– Prepare Settlement Statement
– Prepare Bill of Sale
– UCC-1 lien Search
– Prepare Escrow Agreement
– Form of Restrictive Covenant Agreement-(sometimes)
– Prepare Representations and Warranties of Seller and Principal(s) (sometimes)

Closing Attorneys have to confirm that multiple tasks are completed before they will release escrow and send closing proceeds to all parties.

EATS Brokers provides a list of tasks that are completed or confirmed by an experienced Closing Attorney before closing:

Asset Purchase Agreement signed by all parties
All amendments are provided to Closing Attorney
Equipment List provided
Landlord’s Approval of Assignment or New Lease
Final inventory amount (if the purchase price is to be adjusted)
Prorations or Adjustments (if needed)
Franchise Agreement Approval
Wiring instructions for Franchise Transfer Fee
Wiring Instructions for Seller
Wiring Instructions for Broker
Allocation of Purchase Price-(8594 Form)-Asset Acquisition Statement
Buyer Funds-wired directly to the escrow account
Release of Liens or Payoff Letters
Lender’s Instructions (if third-party financing)

When selling a restaurant, EATS Broker always recommends contacting a closing attorney specializing in business transactions rather than residential transactions.

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.

Questions to ask when Buying a Restaurant Franchise Resale

Customers that are buying a Restaurant Franchise resale do intensive research on the restaurant for sale opportunity but not enough research about the Franchise Brand. The relationship between a Franchisee and Franchisor is a business marriage that can end in success or divorce.

Franchise Brands provide the franchise disclosure document (FDD) to individuals interested in becoming a Franchisee. The FDD is the blueprint on how the working relationship between Franchisee and Franchisor will work.

Franchisors must provide the potential Franchisee with the FDD at least 14 days before it can be signed or any money transferred. It’s a great time to ensure potential restaurant buyers get some critical questions answered.

Dallas Restaurant Broker Dominique Maddox says, “most restaurant buyers only think about the royalty fees, marketing fees, transfer fees, and restaurant upgrades required.

When Buying a Restaurant Franchise for Sale, I think buyers should be focused on researching and asking questions about the Franchisor, Franchise Support Services, and operations.

The Restaurant Broker at EATS Broker provides a list of critical questions that should be answered or considered before buying a restaurant franchise for sale.

-How long has the Franchisor been franchising?

-What is the experience of the Management  Team?

-What is the expansion strategy of the Franchisor?

-What is the Franchisee selection process?

-How long is the term of the Franchise Agreement?

-What does the initial training consist of?

-Does the Franchisor have a preferred food supplier?

-What makes the product unique?

-What is the brand position within the category?

-What is the market demand for the product?

-Have unit sales been decreasing or increasing?

-How many units does the Franchise have open?

The Franchise Disclosure Document (FDD) has some of the answers to these questions above but does not have them all.

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.

4 Tips – How to Sell a Restaurant

How to Sell a Restaurant and get the highest and best offer can be challenging. Restaurant owners can help themselves sell a restaurant by checking their “restaurant paperwork” details before listing it for sale!

When selling a restaurant, the real work starts before the restaurant has been listed for sale. An experienced restaurant owner should know the details, expiration dates, and options available in crucial restaurant paperwork.

Today’s buyers are more educated than ever when buying a restaurant. The internet provides information on restaurant valuations and lists of items that buyers should collect during the due diligence period.

Restaurant owners have to remember that the buyers are looking for Problems, Opportunities, and Lies when verifying information provided to them for review.

The Restaurant Broker provides 4 Tips – How to Sell a Restaurant– Items to review:

1. Lease

Review to understand the terms and conditions that the buyer must agree to before selling the restaurant.

Questions to know:

1. When does the lease expire?
2. How many option terms and years?
3. Security Deposit?
4. Assignment language-any specific qualifications net worth/experience/restaurant concept
5. Guarantor language

2. Profit and Loss Statements (P&L)

An income statement or profit and loss account is one of a company’s financial statements and shows the company’s revenues and expenses during a particular period.

P&L is the document that tells the story of the restaurant. The restaurant owners should understand the story the paper is telling and why?

Questions to know:

1. Does P&L tell the same story as the Tax Returns?
2. Does P&L include all sales?
3. Did you include PPP loans in net sales? (remove)

3. Restaurant Upgrade Requirements (Franchises only)

Several franchises require franchisees selling a restaurant to bring the location up to current company specs and standards.

The restaurant upgrade requirements can include new signage, new chairs, tables, cooking equipment, painting, and more.

Questions to know:

1. Last time the restaurant was remodeled?
2. Does the Franchise require an upcoming remodel?
3. What estimated cost of upgrades would be required to transfer the store to the new owner?
4. Do you plan to pay for upgrades, or will you require the buyer to pay upgrade costs?

4. Franchise Agreement (Franchises only)

Franchise owners should know how many years are left on the Franchise agreement and how much it costs to extend the Franchise Agreement, and for how many years.

It helps if the seller also knows the Transfer fee amount because usually, the buyer will be responsible for paying this fee.

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.

Dominique Maddox featured in Voyage Dallas Magazine

In the February issue, the founder and President of EATS Broker Dominique Maddox was featured in VoyageDallas magazine Local Stories. This is Dominique’s second time being featured in the Voyage magazine; he was featured in VoyageAtlanta in 2020.

Voyage Dallas magazine’s goal is to highlight the best of Dallas people, businesses, organizations, and events. The Voyage Group of Magazines is based out of Los Angeles; they have magazines that feature local hidden gems in multiple states.

The company’s mission is to build a platform that fosters collaboration and support for small businesses, independent artists and entrepreneurs, local institutions, and those making different cities interesting.

Dallas Restaurant Broker Dominique Maddox says, “the opportunity to be featured in VoyageDallas is a blessing for my company. The article allows people to get to know me personally and learn more about EATS Broker.

I talk about my struggles as a Restaurant Broker and starting my Restaurant Brokerage firm. I moved from Atlanta, GA to Dallas, TX in August 2021 to grow my business”. http://voyagedallas.com/interview/exploring-life-business-with-dominique-maddox-of-eats-broker/

EATS Broker is a boutique restaurant brokerage specializing in exclusively selling restaurants, bars, and nightclubs. Our brokerage is known as Restaurant Resale Specialists that are Subject Matter Experts in the selling a restaurant and the buying a restaurant process.

We help our clients through the complex process of buying or selling a restaurant. Our company specializes in selling Restaurant Franchise Resales and Restaurant ReSales. We also help clients with Restaurant real estate site selection, Tenant Representation, Franchise Consulting, and Restaurant Price Evaluations.

To learn more about EATS Broker consulting services or 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.

7 Most Common Restaurant Sale Deal Killers

The most common restaurant sale deal killers are items that are usually out of the hands of a Restaurant Broker. The process to sell a restaurant can feel like a marathon that many participants will have fatigue and not finish the race.

It’s a known fact in the Restaurant Brokerage industry less than 50% of businesses that go under contract will close. Some Restaurant Brokers might advertise hiring closing rates, which could be possible.

The Restaurant Broker at EATS Broker Dominique Maddox said, “some deal killers can be addressed upfront if they are known; it’s the unknown details that kill deals.

How will the landlord, bank, and Franchisor react to the new potential buyer? Did the seller provide all the details? Over my ten years of selling restaurants, I have seen it all”.

Restaurant Broker list of Common Restaurant Sale Deal Killers: 

1. Landlord- The landlord is the KING for restaurant sale deal killers. The landlord owns the property, and transactions cannot be completed without a lease assignment or lease. A majority of the landlords are simple to work with because they want a guarantee they will continue to receive monthly rent.
2. Bank-When a restaurant for sale can qualify for SBA lending, the chances of that restaurant selling increase drastically. That’s the good news; the bad news is that it takes some serious legwork and patience to get a deal to funding.

Banks have several qualifying requirements a buyer must be able to pass. There are many reasons why a buyer may not qualify for lending. Example credit score, lack of liquidity, no collateral or don’t want a lien on collateral, etc.

3. Franchisor: Franchise approval is only an issue with Franchise Restaurants for Sale. Franchise resale listings are popular with restaurant buyers, but the buyer has to get approved by the Franchise.

Franchisors have many requirements before they approve a buyer to become a franchisee. If a restaurant is a franchise for sale, the sale cannot be completed without the Franchisor’s approval of the buyer. Franchise resales require the buyer to travel to the Franchisor headquarters for a discovery day. 

The Franchise can schedule training in a different state than the restaurant for sale. Buyers are responsible for paying the transfer fee, travel arrangements, and housing accommodations while attending training. The training time can range from 2-8 weeks depending on the Franchise Brand.

4. Restaurant Buyer Expectations: Rule #1 Buying a restaurant differs from buying a home. The majority of buyers that purchase a restaurant are first-time buyers and don’t understand the buying process.

Buyer fatigue and misunderstanding is a fundamental reason why some transactions fall apart. The buyer should educate themselves about the buying process and work with a Restaurant Broker thru the process.

5. Restaurant Seller Expectations: Restaurant sellers can misunderstand the restaurant sales process. Sellers have to understand that everything is negotiable for a buyer’s offer (except rent terms). Restaurant owners have to be willing to negotiate, provide supporting documentation, be patient, and be trustworthy.

Restaurant sellers have to understand if the documentation they provide to a Restaurant Buyer during the due diligence period doesn’t check out, the buyer might want to submit a counteroffer and renegotiate.

6. UCC liens: A UCC-1 financing statement is a legal form that a creditor files to give notice that it has or may have an interest in the personal property. Restaurants for sale should have the ability to sell a restaurant that is free and clear of liens.

The closing attorney will conduct a UCC lien search on the business weeks before closing. If a UCC lien is discovered, the restaurant owner will have to pay the fees before closing or at the closing table.

7. Time: It’s a known fact in selling a restaurant that Time Kills deals. The longer the process to sell a restaurant, the greater the deal’s chances of falling apart. Buyer fatigue and seller fatigue become an issue if an agreement is dragged out.

Buyer and seller work off a closing checklist, and both parties must work together to meet deadlines.

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.

Step by Step Process to Buy a Restaurant Franchise

The Step by Step process to buy a restaurant franchise for sale can be a complex process with multiple guidelines, requirements, and documentation to read.  Did you know the top restaurant brands have a Checklist that potential franchisees have to complete before they can purchase a Franchise Restaurant Resale?

The Restaurant Resale Specialist at EATS Broker will share information on the step-by-step process to buy a restaurant franchise resale.

Restaurant Broker 6 Steps to Buying a Restaurant Franchise Resale: 

Step 1: Asset Purchase Agreement

When buying a restaurant for sale that is a franchise, it’s considered a resale/transfer. The buyer and seller will agree to terms on an Asset Purchase Agreement. Once both parties have signed the agreement and the buyer has deposited the escrow, the approval process with the franchise brand starts.

Step 2: Contact Franchise for Approval 

• Submit an inquiry by:

1. Inquiries are made online by visiting the company’s website to submit an inquiry
2. The buyer will have to fill out a Contact Us form; information usually asked includes:

-Franchise State

-Timeframe for opening

-Liquid Capital to invest

• The Franchise will reach out to potential candidates for an initial conversation

Step 3: Initial Conversation with Franchise

• The Franchise Development Team will reach out to discuss your interest in the brand. This initial call is an excellent opportunity for buyers to ask questions about the brand.
• This conversation usually covers the following topics.

– The buyer’s background

-Familiarity with the Brand

– Current Financial Situation; Liquidity and Net Worth Requirements

-Time frame to buy/open

• Restaurant Franchise Resales-buyers will let the Franchise know that they are buying a Restaurant Franchise Resale and are currently under contract with the seller and the location.

***Most franchise brands Net Worth Requirements are lower for Restaurants for sale than new restaurant openings.***

Step 4. Complete & Submit Required Materials

• Items required for the franchisee approval process:
• Completed Application For a Franchise
• Prospective Franchisee Business Plan

– Plans should include an executive summary, operating plan, marketing, advertising plan, and financials.

• Signed Franchise Disclosure Document (FDD) Receipt
• Validation Documents

Step 4. A

Signed Franchise Disclosure Document (FDD) Receipt

• You will receive a PDF copy of the Franchise’s current FDD for signature.
• The Franchise Disclosure Document should be signed and returned to Franchisor.
• You must receive this Disclosure Document at least 14 calendar days before you sign a binding agreement with or make any payment to the Franchisor or an affiliate in connection with the proposed franchise sale.
• The FDD summarizes a company’s history, business experience, assistance, support, franchisee’s obligations, training, fees, estimated initial investment, financial performance representation, franchise agreement, and other essential information.

Step 4. B

Validation Documents:

• Documents are required for financial validation with your application. The necessary documents can include depending on the Franchisor:
• Photocopy of your ID
• Last 3-6 months of your bank statement – including Checking and Savings
• Pay stubs, W-2s for 2-3 years, or other proof of Income.
• 401Kor other retirement account statements.
• Authorization for Franchisor to complete a background and credit check.

5. Discovery Day

• Buyer will fly to the headquarters of the Franchisor
• During the visit, buyers are introduced to the leadership team and representatives of every operational department who will train, support, and assist you as a franchisee.
• Face to face meeting with the decision-makers for franchise approval.
• Buyer should understand this is an interview to see if the Franchisor feels the candidate will be a good fit with the brand.

6. Final Decision:

• Franchise Development Team member will contact buyer/candidate with approval.
• Franchisor will draft Franchise Agreement with buyer’s business entity information.
• Restaurant Buyer will sign the agreement and send Franchisor Transfer Fee.
• Franchisor will schedule a required training session for the buyer.

The transfer process can’t be completed until the restaurant buyer completes training. The required training depends on the Franchise Brand, which can range from 2 weeks – to 8 weeks.

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 by email at sales@eatsbroker.com. Visit our website at www.EATSbroker.com.

How is Selling a Restaurant like Fishing?

Are you asking yourself how is selling a restaurant like fishing? The best fishers in the world know that they are not guaranteed to catch a fish every time they go fishing. The art of selling a restaurant is a process that is not guaranteed to end successfully for the restaurant owner.

If there were guarantees in fishing, they would call it catching. Fishing can be defined as the activity of trying to catch a fish. Selling a restaurant could be described as trying to catch the RIGHT buyer.

When it’s time to sell a restaurant, the owner needs patience, just like if they were going fishing. It can take an average of 6-8 months to sell a restaurant, and only 20%-30% of all restaurants listed for sale will actually sell.

When fishing, bait is used to attract the fish to bite the hook. When selling a restaurant, the lure is the details about the restaurant for sale to attract buyers.

Dallas Restaurant Broker Dominique Maddox says, “ providing a buyer with the cash flow, gross revenue,  EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization), and asking price is the bait to attract a buyer.”

While fishing, a person can get a bite from a fish, and the process of securing the fish starts. The restaurant for sale listing can get multiple inquiries from interested buyers before the restaurant is sold.

The Restaurant Broker at EATS Broker knows it takes talking/emailing to anywhere from 60-75 buyers before finding the buyer that will actually buy the restaurant for sale. Only 2% of buyers looking to buy a restaurant will purchase a restaurant for sale.

Once a qualified buyer has signed the non-disclosure agreement and sent proof of funds to qualify for the listing, and decides to make an offer, the process of getting that buyer to the finish line starts.

Just because a fish bites the hook does not mean fresh fish is for dinner. The fishing line can break, get snagged on debris, or the fish just gets off the hook.

Every buyer that goes under contract for a restaurant for sale does not end in a closed deal. The due diligence period for a buyer and seller would be equivalent to a person struggling with a fish on the hook.

Unlike fishing, the wrestling match between the fish and person fishing is usually done within an hour. When selling a restaurant, the due diligence process is usually 10-30 days for deals under $2 million.

The conclusion in fishing is that you catch a fish, celebrate with a delicious meal, or if you don’t catch a fish, you just have stories to tell.

When selling a restaurant after the deal closes, The restaurant seller gets a check at the closing table, and the Restaurant Broker receives a commission. But if the deal doesn’t close, it’s time to go fishing for the next buyer.

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.

Meet Dallas Restaurant Broker Dominique Maddox

The title Dallas Restaurant Broker Dominique Maddox is a title I’m still getting used to hearing. I relocated from Atlanta, Georgia, to Dallas, Texas, in August 2021 to expand my Restaurant Brokerage firm.

My story starts in Anchorage, Alaska, where I lived from 1981-2000; I received a football scholarship to attend Morehouse College in Atlanta, GA. After high school, I actually thought about attending culinary arts school to become a chef. My ambitions of a culinary arts career ended when I visited Atlanta, Georgia, on my football recruiting trip to Morehouse; I knew Morehouse was for me.

My life is full of examples of my ambitions and goals of always “betting on myself.” I left Corporate America in 2008 to go full-time in Real Estate. Well, I couldn’t have chosen a worse time to get introduced to residential home sales.

During this time, homes in Atlanta, Georgia, were selling for unbelievable discount prices; I would always get the investors looking for homes in the price range of $10,000-$100,000. The first home I sold in Atlanta was for $10,000 in an area that sells for over $200,000 today’s market.

I always had dreams of getting into Commercial Real Estate. My life changed in September 2010; I received a random email asking if I ever thought about being a Business Intermediary and selling restaurants?

Well, I had never thought about selling a restaurant, but I was very interested in the opportunity. My interview was a couple days later, and the next thing I knew, I was a Restaurant Broker.

I worked with the Nation’s Largest Restaurant Brokerage firm for 7 years, ranging from Restaurant Broker to Sales Development Manager. I began to notice I had reached a glass ceiling with the opportunity and wanted change.

I opened EATS Restaurant Brokers in October 2019 in Atlanta to bring a new flavor to the Restaurant Brokerage Industry and bring diversity. I decided to change the company name to EATS Broker in December 2021.

Dallas Restaurant Broker Dominique Maddox biggest lessons:

1. Selling a restaurant is like a combat sport; the Restaurant Broker has to contact buyers. It’s game day when it comes to selling the restaurant to a new buyer on the phone or by email.
2. Only 30%-40% of restaurants listed for sale will actually be sold, and only 2% of buyers on the market looking for a restaurant to buy will actually buy.
3. The platform of owning EATS Broker has given me a purpose to help people realize the American Dream of owning a restaurant or selling a restaurant.

I have also been blessed and humbled by the people that have reached out to me for guidance on selling a restaurant, buying a restaurant, or leasing a restaurant.

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.

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:

1. 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

2. 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

3. 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.

How to Get a Restaurant Ready to Sell

The art of getting a restaurant ready to sell really starts with planning and preparation. Restaurant owners planning to sell a restaurant in 2022, should be in the process of collecting and organizing important supporting documents now.

The New Years is a great time for restaurant owners that are considering selling a restaurant to prepare for the sale. January-April is the busiest months for restaurants for sale to go under contract with buyers.

A large number of people are familiar with the process of getting a home ready to sell, but a small number of restaurant owners understand how to get a restaurant ready to sell.

Dallas Restaurant Broker Dominique Maddox says, “ getting all the items required to list a restaurant for sale can be challenging if the restaurant owner is not prepared and organized.

The best advice is to start collecting all your documentation early, so you are prepared when calling a Restaurant Broker for a free restaurant valuation”.

Restaurant Brokers Checklist for selling a restaurant:

A copy of the lease and all amendments

Three years of Profit and Loss statements

Three years of tax returns

A copy of Furniture Fixtures and Equipment-only items owned by the seller

Franchise Disclosure Document (if franchise)

Copy of Vendor/Supplier List

Copy of Employees with pay rates

One year sales tax filings

Pictures of Front and Back of house

The start of a new year brings new excitement to the idea of entrepreneurship and ownership. Corporate Refugees fuel record buyer demand for entrepreneurship. Buyers are paying record-high prices for restaurants that have continued to perform well during the pandemic.

 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.