Top 10 Tips To Selling Franchised Restaurants In Orlando
Selling a franchised restaurant in Orlando brings out a lot of interest among both restaurant and main street business buyers, but a seller of a resale franchise still has to find and pick the best buyer. Below are a list are our top 10 tips to selling a franchised restaurant in Orlando.
1) Franchised restaurants for sale in Orlando can command a higher price than most independent restaurants selling in Central Florida.
This is because franchised restaurants have a wider appeal due to brand recognition. These restaurants for sale in Orlando have to potential to attract both experienced and inexperienced restaurant buyers in Orlando.
2) Restaurant buyers look for the same things they look for when they purchase independent restaurants.
Just because a restaurant is a franchise does not mean it gets a free pass on everything. Restaurant buyers in Orlando still want to purchase a profitable restaurant showing financials on the books. They also want to buy franchised restaurants with favorable leases that are manageable and secure for a new owner.
3. Determine whether or not your restaurant franchise for sale will qualify for an Foreign Investor’s VISA.
If you are selling your restaurant with an Orlando Business Broker, they should be able to determine whether or not it will work for a foreign investors visa. Businesses that qualify typically have good books and records and most U.S. Immigration offices around the world like seeing that new immigrants will be part of a franchise that has a business plan and operation all laid out for them. Both U.S. Immigration and foreign buyers seeking visas see franchised restaurant purchases as having less risk and therefore these business opportunities are more attractive to both parties.
4. Determine whether or not your franchise restaurant for sale in Orlando qualifies for bank financing with an SBA loan or other commercial financing.
For SBA financing to work the business will need to have good books and records. In many cases banks have lists of preferred franchises and restaurant franchises that they prefer to finance. While dealing with an SBA business buyer might take more time, usually the business seller is rewarded with a higher price and more cash at closing.
5. Be aware of specific criteria that your franchise will require from potential buyers.
For example, we were looking to show a restaurant franchise for sale to one of our buyers and the business broker said that even though the restaurant is selling for a price $499k and would qualify for an SBA Loan, the franchise would require any incoming franchisee show they have $500k in liquid cash with no leveraging. Facts like this are important to know!
6. Be aware of any franchise transfer fees.
We cannot even begin to say how many times we have worked on selling franchised restaurants where the franchisee believes they know what amount the transfer fee is only to find out they are incorrect and we are already several weeks into a transaction. Find out what the franchise transfer fee is early on and before you start marketing the business for sale to buyers decide whether or not the buyer or seller will pay those transfer fees. If a buyer has to come up with an additional $5,000 to $10,000 over what they though the actual transfer fee was, it might cause issues if the deal is already in play.
7. Make sure your franchised restaurant for sale has all internal updates and modifications that meet the current franchise standards.
Some restaurant franchisees want to sell their restaurants in Orlando because they’ve had the restaurant for a long time. However some have had their restaurants for so long that they have held back on making all of the franchise updates or with keeping the restaurant premises in good condition. There is a strong chance that the franchise will require these updates prior to a sale to a new owner/ franchisee. So business sellers looking to pass the buck of new update costs onto a new franchisee might be surprised when they find out the franchise may force the seller to make these updates prior to approving and allowing the sale.
8. Make sure you are aware of the training time a restaurant franchise will require new buyers to go through.
Some franchises require extensive training for weeks at a time and some require an incoming franchisee to travel to another part of the country for a week or two at a time to train. It’s an expense and time commitment that buyers need to be prepared for. It also affects the time period needed before closing the sale of the restaurant.
9. If the franchise restaurant buyer you are working with in Orlando is looking to get a foreign investor’s visa and has no credit history in the country find out if possible ahead of time what requirements the landlord will have for this type of tenant.
Business brokers in Orlando receive a lot of inquiries from foreign buyers looking to purchase businesses. It is very common for landlords to ask foreign business buyers for a larger deposit than domestic business buyers. This is usually due to a foreign buyers lack of credit history and social security numbers. On some occasions foreign buyers have been in the country for a while and it is not an issue. However on some occasions there are landlords that will have requirements a bit on the extreme side. This additional deposit money can be enough money to affect the success of the deal if the buyer does not have the funds to cover the extra deposit. If possible, ask the landlord about this issue when you first enter into a deal with the buyer.
10. Make sure the remaining lease offered by the landlord is satisfactory for the buyer early in the deal.
Most restaurant buyers, especially those buying restaurants are concerned about the length of a restaurant’s lease. They do not want to worry about fighting a landlord to keep their space two years later so it is important that they ask. Some buyers in Orlando are okay with 10 years but some want more. If a buyer gets an SBA Loan, it’s very possible that the bank will require the buyer to obtain a lease that lasts the duration of the loan.
If you or someone you know is looking to buy or sell a restaurant franchise in the Orlando and Central Florida area please call us at 407-478-4101.