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SVTPerformance's Chain of Restaurants
Road Side Pub
Buying an existing business
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<blockquote data-quote="13COBRA" data-source="post: 16686372" data-attributes="member: 138337"><p>1.) I would want tax returns. More than likely, he's understating income so I would want to buy it off of the returns and not what he verbally says he makes.</p><p>2.) Is he the only employee? Would he be willing to stick around for 30 days to show you how it operates? If he's the only one, and even if he's willing to stick around for a while, I would want to know 100% upfront what all he does at the store. If there are things he does that you can't do, now you have to hire someone else, and that's added expense.</p><p>3.) Check with the building owner about a lease contract and if it's transferable. If he's been there a long time, I'd guess the rent is low and the landlord will up it significantly when it changes hands.</p><p>4.) I would want to know what's in current inventory, less than 60 days old...and what's in old aged inventory 60 days +. Whatever is in old aged inventory I'd want to know what the write down schedule is like and the value compared to retail that are currently on the books. Depending on how that part looks, I wouldn't buy any of the old inventory.</p><p>5.) I would ask to see the franchise agreements as well. It's possible that he could sell to you, and if you don't meet the manufacturer's standards the first 6-12 months, they could pull the agreement. The standards for a new franchisee are likely higher than for someone that has been with them and grandfathered in for years.</p><p>6.) I would do an analysis on how he gets his business now. Whether it's word of mouth, online advertising, all drive by traffic, etc. </p><p>7.) As far as other agreements go, I would want to know every agreement that he has with any vendors, companies, representatives etc. I would want to know the nature of them, the period it's under contract and if it's transferable or not. Hopefully they're all transferable, but are also able to be cancelled without repercussions. That would allow you to cherry pick.</p><p></p><p>Just a few things off the top of my head.</p></blockquote><p></p>
[QUOTE="13COBRA, post: 16686372, member: 138337"] 1.) I would want tax returns. More than likely, he's understating income so I would want to buy it off of the returns and not what he verbally says he makes. 2.) Is he the only employee? Would he be willing to stick around for 30 days to show you how it operates? If he's the only one, and even if he's willing to stick around for a while, I would want to know 100% upfront what all he does at the store. If there are things he does that you can't do, now you have to hire someone else, and that's added expense. 3.) Check with the building owner about a lease contract and if it's transferable. If he's been there a long time, I'd guess the rent is low and the landlord will up it significantly when it changes hands. 4.) I would want to know what's in current inventory, less than 60 days old...and what's in old aged inventory 60 days +. Whatever is in old aged inventory I'd want to know what the write down schedule is like and the value compared to retail that are currently on the books. Depending on how that part looks, I wouldn't buy any of the old inventory. 5.) I would ask to see the franchise agreements as well. It's possible that he could sell to you, and if you don't meet the manufacturer's standards the first 6-12 months, they could pull the agreement. The standards for a new franchisee are likely higher than for someone that has been with them and grandfathered in for years. 6.) I would do an analysis on how he gets his business now. Whether it's word of mouth, online advertising, all drive by traffic, etc. 7.) As far as other agreements go, I would want to know every agreement that he has with any vendors, companies, representatives etc. I would want to know the nature of them, the period it's under contract and if it's transferable or not. Hopefully they're all transferable, but are also able to be cancelled without repercussions. That would allow you to cherry pick. Just a few things off the top of my head. [/QUOTE]
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SVTPerformance's Chain of Restaurants
Road Side Pub
Buying an existing business
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