When you are ready to sell your restaurant, there are two options available to you. One option is to sell your restaurant on your own. Your other option is to hire a restaurant broker. A restaurant broker will handle all the details of your sale. Selling a restaurant on your own requires a lot of time, and you need to have the right contacts.
Most people choose a professional restaurant broker to help them with their sale. Hiring the right broker can leave you with the sale you’re hoping for while hiring the wrong broker can leave you without a sale. These nine questions prepared by Frank Pupo of Vancouver Restaurant Brokerage – Vancouver, BC will help you in hiring the right restaurant broker.
1. Do you have much experience in selling restaurants like mine?
A broker that has experience selling a restaurant like yours is imperative. Selling an accounting business is going to be different than selling your restaurant. Not only are your businesses completely different but they will not attract the same buyers. You need a restaurant broker that has experience working with restaurant buyers. It is also helpful to have someone who has sold in the restaurant industry before.
Hiring a broker who has no experience with restaurants will require them to spend time learning your industry and business model instead of talking with potential buyers.
2. Where is your office?
To save money, many people are working out of their home instead of in an office. This isn’t necessarily a good thing for restaurant brokers. When your restaurant broker is working out of their house, it could mean this isn’t their full-time business. You need someone that can devote their time and attention to your sale.
It is good to look for a restaurant broker that has a team of brokers working with them. Having an office gives your broker a professional setting to negotiate and talk with your potential buyers. When hiring a broker, it is happy to remember they are a direct representation of your restaurant.
Would you prefer your broker to meet with buyers in an office or their living room? The image your broker represents will have an impact on your sale.
3. Have you sold any restaurants like mine?
It is important to find out how many restaurants like yours the broker has sold. This is different than restaurant type. There can be a difference in restaurant types. A drive-thru coffee shop is much different than a 100-person Mexican restaurant with a bar. If a restaurant broker hasn’t successfully sold your type of restaurant, it would be in your best interest to look somewhere else for a broker who has experience with your type of restaurant.
4. As a broker, how would you value my restaurant?
Asking your restaurant broker how your restaurant should be valued will show you how experienced he or she is. The broker should ask you questions before they give you an answer and if you hear a cookie cutter response turn around and leave immediately. The valuation of your restaurant will be very different from another restaurant. Do not hire someone who is not interested in the details of your restaurant when doing your evaluation.
5. How will the sale of my restaurant be kept from my customers and those I compete against?
A critical factor in selling your restaurant is keeping it confidential. Find out what the broker’s plan is for keeping the sale private. You do not want your customers finding out you are trying to sell. This can leave them worried about why you are selling, and you were losing business before the sale. You also do not want those you compete with to realize you are exploring the option of selling your restaurant.
A good restaurant broker can generate interest in your restaurant without giving details on your sale. When a buyer has shown interest, they will need to be vetted. Your broker should make sure they have the financial ability to buy the restaurant. If your broker finds out, they have the funds to purchase the restaurant they need to sign a non-disclosure agreement before any details are released to them.
6. As a restaurant broker, how many buyers do you have that are already qualified?
Make sure they do not tell you they have a large number of qualified buyers. A good restaurant broker needs to have relationships with potential buyers. It takes time and energy to develop real relationships.If you are given a large number, say in the thousands, most likely they just have a list of names. A large list of names will not help you in selling your restaurant. You need a broker who has a healthy relationship with a small set of buyers.
7. Will you list my restaurant for 1 million dollars?
Good restaurant brokers will know the realistic valuation for your restaurant. You also want a broker that has a pricing strategy that will ensure a sale you are satisfied with. Your restaurant broker does not get paid unless the restaurant sells. As a broker, they will want to make sure it is priced correctly. The goals of a restaurant broker should be to sell your restaurant at the highest possible price.
A broker that agrees to your unrealistically high sale price is wasting your time. An experienced broker will rate the restaurant accurately, so they do not waste your time, or there’s. His or her goal should be to rate your restaurant accordingly, so it sells quickly.
8. What is your current number of listings?
How many listing a broker has will give you an indication of how much time they will have for your sale. A restaurant broker with an extensive list of active listing will not be able to give you the time and attention your transaction deserves. A long list can also mean they take on many listing in the hopes that they can complete one.You want to look for a broker that has around three to seven listings. This will ensure they can give your restaurant sale the attention it needs to get a contract. An agent who is willing to limit their listing will show you they know how much attention each listing needs.
9. Can you help me with sales contract preparation? Should I hire an attorney?
A broker with experience will be able to help you draft all of your legal documents and should also know different ways to structure your restaurant deal. However, a good broker will advise you to hire a legal team. You want an independent team to review all your documents before you sign anything.
Your broker can prepare your paperwork and help you structure your deal, but always have lawyers review it before you sign. There are so many different counties, state, federal rules that you want to make sure everything is in order before you sign. The extra expense of a legal team can save you lots of time, energy, and money down the road.