Buying Franchise Re-sales (Part 2 of 2)

This article is a continuation from yesterday's posting by Adam Bannister of businessesforsale.com.

Company culture

It’s also important to meet with existing staff before you buy. You need to know how many will stay, and what it will take – in terms of pay rises and other incentives – to make unhappy staff stay.

If staff have to be replaced you need to find out how much it will cost to hire and retrain replacements and incorporate that into your evaluation of the business.

And if you don’t get on with the staff or feel you’re at odds with the culture of the company then it’s best to look elsewhere.

You need to check...

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Buying Franchise Re-sales (Part 1 of 2)

Franchise re-sales offer the possibility of quick profits.

If you buy a franchise resale – where the owner of a franchise has decided to put his business on the market – then you can reap the benefits that come with both buying a business and running a franchise.

As we’ve said elsewhere on this site, when you buy a franchise for sale you get to run your own business but with the brand power, marketing muscle and technical and administrative support of an established franchisor.

Quick profits

But if you’re buying an established venture, then not only do you have...

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Franchise Resales

In our most recent survey, it was quite obvious that the sale of existing franchises makes up a very small portion of sales. The sale of new franchises is almost non-existent. While it’s the sale of both that is of concern, the fact that the sale of existing franchises is so minimal should be of great concern.

Let’s face it, franchising is here to stay and, unfortunately, is slowly replacing many small businesses. Whether it’s fast food or a brand new concept, franchised small businesses are taking over. And, although they may be replacing many small businesses such as the fast food category, they are also bringing many new concepts to small business.

Most franchises are small businesses individually owned and operated. They are the small businesses of the future and business brokers should be handling the resales, if not the sale of new ones. The resale of franchises is no different than the sale of any small business. Yes, you have to deal with the approval of the franchisor, but in most cases, the lease is easier to transfer and other details may also be easier.

We strongly urge the main street broker to increase their efforts to handle the resale of franchises. Many of the owners have been in business for some time and are ready to move on. Our most recent survey reported that franchise resales represented less than 12 percent of their sales. That’s not nearly enough.


Have you had any franchise resales since November 2011? 

We need your help in adding new franchise pricing data and maintaining updated information on our current franchise list. We have a very simple form which gives us sufficient financial information to create a Rule of Thumb.

We would be most appreciative if you would review your sales since November 2011 and complete the online form for all of your franchise resales. You will always be able to obtain a current list by emailing me personally.

To contribute franchise resale information, please use our online form.

 

Recasting Income Statements in the ValuTrax Business Pricing Model

We realize that the following is a bit self-serving since we do sell and promote ValuTrax, but we also feel it is an important and informative article on the process.


The ValuTrax Small Business Pricing Model is an accurate, easy-to-use online application available online through Business Brokerage Press. ValuTrax provides a Broker’s Price Opinion. It does not provide a formal valuation.

The ValuTrax pricing model is based on traditional business brokerage pricing methods that are easy-to-use, easy for clients to understand, and which can generate supplemental income for brokers and other business consultants. ValuTrax Pricing Reports sell for $500 to $1,500 and up with additional information included. The ValuTrax application consists of 12 basic steps, with the ValuTrax Pricing Report being generated in Step 12 in either PDF or editable MS Word format. Brokers and other business consultants can use the editable Word format to add other sections to the ValuTrax report such as a description of the subject business, an industry profile, competitive analysis, for sale comps, etc. Business Appraisers can also use the editable MS Word format, and a built-in editable Calculation of Value template, to prepare Calculation of Value reports for small businesses.

In Step 1 of the ValuTrax application,

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Invitation to Participate -- Quarterly Review Survey

Two in five business sellers are prepared to be “very flexible” with their asking price, according to the latest BusinessesForSale.com quarterly survey.

The survey, which forms part of the Market Intelligence section on BusinessesForSale.com surveyed business buyers and sellers worldwide. Further highlights include that 30% of sellers thought that shortage of credit was significantly affecting sales, compared with 14% who were confident that they’ll find a buyer. Nearly half (48%) of the buyers surveyed would pay a premium for a business with a good track record. Yet 45% of potential buyers will buy a struggling business if it's realistically priced and 34% would even enjoy the challenge of turning round a failing business.

We are now extending our market intelligence service to brokers/franchisors and are inviting them to participate in future surveys on their areas of interest. Please click here for more information. 

Hot Business List -- March 2012

Below you will find the current “hot” business list courtesy of data from Businesses For Sale. We asked Businesses For Sale for a monthly ranking of business types based on the number of “hits” on their site. This ranking is not based on the actual sale of businesses.

Top Ten Businesses for March 2012:

1. Convenience Stores 

2. E-Commerce Businesses

3. Fast Food Franchises

4. Websites

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Asking Price versus Selling Price

In preparing for a talk in Florida next month, I found a very interesting statistic. I have kept some data from my days at United Business Investments (UBI). As a few of you know, UBI was the first business brokerage firm to have some 50 company-owned offices in eight states. I had someone who kept pretty accurate statistics of the offices’ performance: number of listings, number of deals, sales, etc.

One of the more interesting statistics was the actual selling price versus the seller’s asking price. In 1978, it was...

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The Most Important Step When Buying a Franchise (Part 2 of 2)

 Franchisee Feedback

The most important aspect of your franchise due diligence is to obtain feedback from current and former franchisees.

Speak with enough franchisees so that you have representative feedback. I would suggest a minimum of 8 to 10 franchisees. The more franchisees you speak with the more credible the feedback. You should speak with existing and former franchisees in order to gain a broader perspective.

Call franchisees in different parts of the country as well as in the geographic area you’re interested in. If you can...

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The Most Important Step When Buying a Franchise (Part 1 of 2)

Following is an article by franchise guru Ed Teixeira. While it is written for franchise buyers, if you are considering representing a franchisor to sell new units for them (and why aren't you if you are not?), this article will help.


 

Performing a comprehensive evaluation of a franchise is a critical step before you pay the franchise fee and sign the agreement. Learn how to perform this important activity.

There are key steps in the franchising process but none more important than...

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10 Tips to Take Aim at Your Target Market

Who are your best clients? Wouldn’t you like to have more just like them? Most of us would. Start by gathering all the information you can about them. What do they have in common? Are they in the same or similar industries? The same size company? Here are some quick tips to help you take aim at your target market.

1. Pick a couple of your best clients, and write a brief case study about them for future use. Really consider your competitive advantages towards that market and include how...

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A Startling Franchise Industry Statistic

During the process of gathering some franchise industry data I discovered an interesting statistic. Read more to learn out what I found.

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Comparing Comparables

The Direct Market Data Method (DMDM) relies on the principle of substitution. A buyer will not pay more than the price at which he can obtain an equally desirable substitute.

The DMDM method uses parameters of comparison in the form of income multipliers. They can be multipliers of income, either gross net or discretionary cash flow. The three most popular databases which supply the transactional data are; Institute of Business Appraisers (IBA), BizComps and Pratts Stats.

When attempting to value a company using the Direct Market Data Method (DMDM), it is not uncommon to experience...

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CONTRIBUTORS

Tom West
BBP Co-Founder  ~  Massachusetts

Tom is a founder and past president of several large business brokerage firms and is also a founder, past president, and former Executive Director of the International Business Brokers Association (IBBA).  He has authored and co-authored several books, is editor of all 21 editions of The Business Reference Guide, and is often quoted in a variety of national newspapers and periodicals.

Email 


Loren Marc Schmerler
Bottom Line Management, Inc.  ~  Georgia

Loren CPC, APC is President and Founder of Bottom Line Management, Inc. He has been a business broker since 1986 and a business consultant since 1970. Loren represents sellers and buyers and has qualified for the 2012 Georgia Association of Business Broker’s Million Dollar Club.

Email  |  Web



Robert Flynn
Managing Partner of United Brokers Group, LLC ~ Rhode Island
Robert has been a business brokerage firm owner for nine years. Prior to that period he was a Senior Executive in two public and privately held technology and manufacturing businesses for twenty-eight years. From 1982 to 1996 Robert was a Senior Executive at the publicly traded +$3 billion (USD) London-based Cookson Group. He managed technology and manufacturing companies in England and the United States with a particular emphasis on startup and turnaround situations. Robert is also a licensed Rhode Island real estate salesperson and has owned five businesses.

 

Email  |  Website 1  |  Website 2 


Bob Sweeney
President of Innovative Travel Acquisitions, Inc. (ITA) ~ Georgia
Bob founded the Atlanta-based travel and tour business brokerage firm in 1991 after a successful 9-year career on Wall Street. Known as the "Matchmakers for the Travel and Tour Industries", ITA is a member in good standing with the American Society of Travel Agents (ASTA), the National Tour Association (NTA) and the International Business Brokers Association (IBBA). ITA operates a confidential platform LINKING buyers and sellers of travel and tour related companies throughout North America.

Email  |  Website  


Darrell Arne
Founder of Arne & Co.  ~  New Mexico
Darrell began his professional career in public accounting in 1970. In 1983, Darrell formed his own CPA practice, with emphasis on business valuation; by 1992, he had earned the Accredited Senior Appraiser (ASA) designation in business valuation. He then earned the Certified Business Intermediary (CBI) designation in 1995, and Certified Merger & Acquisition Advisor (CM&AA) designation in 2008. He discontinued practicing in public accounting in 1994 when he formed Arne & Co., specializing in exit strategy planning for business owners, business valuations, business acquisitions & sales, business dispute mediation, part-time CFO services, and developer of business training seminars. 

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Jean D. Sifleet, Esq.
Business Attorney and Creator of Smart Fast®  ~  Massachusetts
Jean began her career with big law and accounting firms. She did a stint in state government, and then moved to the computer and communications industry. Frustrated with bureaucracy, Jean co-founded and sold two successful companies.  Today, Jean practices business law. She enjoys working with people who are starting a company, or who want to grow their company and stay out of trouble. Her advice is grounded in her first-hand experience as an entrepreneur as well as her knowledge of law, finance and management.  Calling herself a nontraditional lawyer, Jean uses Smart Fast®, a practical and systematic approach to evaluating options and making informed decisions. 

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Ron Johnson
Chairman, ABI Business Sales, Mergers & Acquisitions  ~  California
Ron is Chairman of ABI Business Sales, Mergers & Acquisitions, which was established in San Ramon, CA, in 1984. Ron has been the intermediary in over one hundred transactions since entering the profession in 1991, and has managed, for his associates, many hundreds of additional transactions. Ron is well recognized nation-wide in his profession, having served 10 years on the Board of Directors of the California Association of Business Brokers (CABB), including two terms as President of the CABB.

Email  |  Website


Ralana Shelley
Certified Business Intermediary, Sunbelt  ~  Indiana
Ralana comes to the table with over eight years of experience in the Business Brokerage industry. Prior to making the transition to Business Broker, Ralana specialized in Marketing small to mid-sized businesses in the Indiana marketplace in her role as Marketing Manager for Sunbelt. 

Email  |  Website 1  |  Website 2  |  Website 3  |  Blog  |  LinkedIn  |  Twitter


Rose Stabler
Certified Business Brokers (CBB), Managing Partner ~  Texas
Rose has 25 years of business experience from serving in management and consulting positions in the Oil & Gas, Biotechnology, and Manufacturing industries to working for private equity giant Forstmann Little & Company to starting, building and selling an online promotional product firm that featured her own line of items. Rose serves as business advisor on the Houston Business Show on CNN650 and appears regularly on the Movers and Shakers panel discussion segment of Houston Manufacturers Show. Rose has published many articles about the process of buying and selling businesses and has contributed to Inc. Magazine. 

Email  |  Website 1  |  Website 2  |  Website 3  |  Blog


Wayne Quilitz
Murphy Valuations, President ~  Florida
Wayne's experience includes 28 years in electrical engineering and marketing in the electronics industry.  He served in the U.S. Navy, worked for Boeing Aerospace and Texas Instruments, and owned/operated a retail store for five years before joining Murphy Business and Financial Corporation.

Email  |  Website 


Richard L. Kolman
Franchise Note Buyers, LLC, President & Principal Owner ~  San Diego, CA

Richard has long served as trusted in-house legal counsel for some of the nation’s leading franchising companies. Rich began his franchise legal career in 1988 as a Corporate Attorney in the Legal Department of McDonald’s Corporation. He recently retired from the UPS Legal Department, following eleven years as Senior Franchise Counsel for The UPS Store and Mail Boxes Etc. (4,400+ franchises).  Despite the current adverse national economy, Franchise Note Buyers and its strategic underwriters bring unparalleled access to large sums of liquid capital needed to quickly fund numerous Franchise Notes at top-dollar prices.

Email  |  Website  |  Blog 


Bill Martin
ABMI, USBIZCORP and USFRANBIZ Founder  ~  Missouri

Since starting as an agent in 1982, Bill's career has included the building of business brokerages from scratch in over 20 cities coast to coast.  He is the founder of United States Business Brokers, Inc (USBIZCORP) and USFRANBIZ, Inc.  Bill has been involved in the sale of almost 4,000 different business acquisition transactions. He has also had articles and opinion memo’s published in trade publications, and is a nationally recognized trainer and mentor in the business brokerage industry.

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Russell Robb
Managing Director, Tully & Holland, Incorporated ~ Massachusetts

Russell Robb is a 20-year veteran in the mergers and acquisitions business, providing investment banking and corporate finance advisory services to a wide range of middle market companies. His transaction experience includes numerous companies in the consumer products industry, as well as a broad array of other manufacturing and distribution companies in various industry sectors. Russ is the past president and owner of two sporting goods manufacturing/retail companies. He is a published author of Selling Middle Market Businesses and the former editor of a highly regarded monthly M&A industry newsletter. 

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Len Krick
Sunbelt Owner, CBI, M&AMI ~  Las Vegas, NV
Len, owner of the Sunbelt Las Vegas office, is a Certified Business Intermediary ("CBI"), a Merger & Acquisition Master Intermediary ("M&AMI"), and holds a Nevada Real Estate Broker License. He has over twenty years of business and business consulting experience and is an active member, moderator and speaker for the International Business Brokers Association ("IBBA"), the Las Vegas Business Forum, and the Las Vegas CFO Group.

Email  |  Website


Ted J. Leverette
"Partner" On-Call Network, President 
Ted, The Original Business Buyer Advocate ®, has consulted with thousands of business buyers and owners on buy/sell, valuation and business improvement since 1974. Since 1993 he has taught affiliates in the USA and Canada, who independently own and operate their consulting practices, The Street-Smart Way to Become a Business Consultant™. He has been a lecturer for trade associations and author of texts, articles and the book, How to Get ALL the Money You Want For Your Business Without Stealing It™.

Email  |  Website


Ed Teixeira
FranchiseKnowHow, LLC ~  New York
Ed is the founder and President of FranchiseKnowHow, LLC a franchise-consulting firm. Ed has worked in the franchise industry for thirty years and has served as a corporate executive for firms in the retail, manufacturing, healthcare and technology industries. He has been involved with over 1,000 franchise locations and has transacted international licensing in Europe, Asia and South America. Ed is the author of Franchising From The Inside Out.

Email  |  Website


Jeff Fabian
Fabian, LLC ~  Baltimore, MD
Jeff is founder of Fabian, LLC, a boutique law firm headquartered in Baltimore, Maryland that provides trademark and copyright protection and contract drafting and negotiation services for businesses, artists, entertainers and athletes. He has published scholarly articles on trademark use in the Internet context and state franchise relationship laws, and has co-authored numerous articles appearing in various legal, business and industry publications.

Email  |  Website 1  |  Website 2  |  Twitter 


George D. Abraham
Business Evaluation Systems, CEO 
George has been involved in the transfer of over 450 businesses and performed over 12,000 appraisals in the past 32 years. Two of the appraisals Mr. Abraham was involved in passed the scrutiny of the World Bank. His company was the first in the nation to develop and gain national attention for its unique and highly accurate business evaluation software programs.  George is a licensed Real Estate Broker, Real Estate Appraiser, Business Appraiser, Machinery and Equipment Appraiser, Board Certified Business Broker, Certified Environmental Inspector, Certified Business Intermediary, Licensed State Property Tax Consultant, Accredited Review Appraiser, and Certified Business Counselor.

Website


Clyth MacLeod
Clyth MacLeod, Ltd. Managing Director ~ New Zealand
Clyth has over 40 year's experience in business broking and business valuation. yth is also a director of Business Appraisals Ltd (business valuers), BizStats Ltd (a national database of business sales information) and Australasian Business Valuations Ltd (consultancy).As well as authoring many articles and texts Clyth has lectured nationwide and overseas on business sales and valuation for many organisations including the Institute of Chartered Accountants of New Zealand and the International Business Brokers Association in the USA. The only business broker to be awarded a Life Membership by the Real Estate Institute of NZ and a Fellowship by the International Business Brokers Association he remains active in the industry and committed to leading a professional team.

Website


Jack R. Sanders
Spectrum Corporate Resources, LLC Managing Director
Jack has been an active full-time business intermediary since 1985. He has personally handled over 130 business transfers and has appraised over 1,450 businesses. He is also the author of the “BIZCOMPS®” studies, a leading authority on the market value of small and medium business in the United States and Canada. The studies contain actual transaction information on over 12,000 transactions and are marketed in both print and electronic form. Jack is also an instructor in educational courses leading to the Certified Business Intermediary designation.

Website


Christopher George
George & Company, President ~  Worcester, MA
Christopher is a Certified Business Opportunity Appraiser, Company President, and also a past president of the Association of New England Business Brokers. Chris has been engaged in the appraisal, sale and financing of small to mid-sized businesses since 1971. He has personally aided buyers & sellers in thousands of sales and appraisals.

Email  |  Website  |  LinkedIn  |  Facebook

 


Roger Murphy
Murphy Business & Financial Corporation, President / CEO ~  FL
Roger is a Certified Business Intermediary and Master Certified Business Counselor with over 25 years experience in executive management and financial management. He is the President / CEO of Murphy Business & Financial Corporation, one of the largest and most successful business brokerage firms in North America with business brokers located throughout the United States and Canada. Murphy Business specializes in businesses for sale, franchises, business valuations, and commercial real estate.

Email  |  Website 


Amanda Puppo
MarketReach Inc., CEO & Founder  ~  Lawrenceville, NJ

During her dealings with various companies, Ms. Puppo became aware of an apparent general aversion towards the application of the cold-call, while at the same time, realizing its importance in business. In March, 2001 at the age of 26, Ms. Puppo created MarketReach Inc. MarketReach does cold-calling/lead generation and market surveys, so clients can spend their time building their business and servicing their customers. MarketReach was named a Finalist in the Most Innovative Company category in The 2004 Stevie Awards for Women Entrepreneurs. 

Email  |  Website   |  Twitter

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