If you’re thinking about buying or selling a business, working with a licensed broker can save you hours of your precious time. Working with a business broker can also mitigate unforeseen headaches and discrepancies that often present themselves in these complex transactions. Are you looking to buy your first restaurant?
Maybe you’re ready to expand your business. Whatever the circumstances, knowing what questions to ask a business broker is critical in the search process. You are about to start a new adventure, and matching with the best fit is essential. To help you navigate these conversations and vet your business broker, we have broken down seven must-ask questions.
Where is the restaurant broker located?
A business broker’s network is one of the most beneficial qualifications they can bring to the table. If you are looking for commercial property or business for sale in Charlotte, North Carolina, but the potential brokerage firm is out in Northern California, it might not be the best fit. Having a steady pulse on the local market and experience dealing within the city limits of your future business location is a definite asset to look for.
Does the broker understand and/or specialize in your business?
Most business brokers cover a variety of industries, such as child-care, medical billing businesses, logistics companies, and landscaping firms, to name a few. If you are looking to start or expand your restaurant, a broker whose experience revolves around selling corporate office space isn’t going to offer you the expertise you need. If your broker doesn’t understand the restaurant industry, it may be a lost cause depending on them to sell or search for the perfect space. Those who have worked directly in the food and beverage industry can offer a niche perspective and support when diving into buying a business.
If they specialize in restaurant brokerage, how many restaurants have they sold in the past two years?
The restaurant industry is ever-changing. Concepts, trends, and hot spots are always evolving and transitioning. This constant ebb and flow create a ripple effect of frustrations for someone who hasn’t been involved in the industry within the last two to three years. Check-in on their tenor and see how recently they closed their latest restaurant deal.
How do they determine the best price for your restaurant?
Determining a listing price is how you tell professionals from amateurs. Does the broker simply ask you how much you’d like for your restaurant? If you’re buying, do they help qualify you for a match tailored to your financial standings and desires? A well-versed broker should be able to provide a comprehensive, relevant market analysis. They should already understand the value of your business and the local (and beyond) demand. Going through a valuation of your business is a crucial component when choosing your perfect business broker. This will allow you to truly understand what your restaurant can (and should be) listed at price-wise.
Does the business broker invest “hard money” into marketing materials such as direct mail, Facebook ads, email marketing, Google ad campaigns, etc.?
Marketing is key when it comes to any sort of real estate sales, especially the commercial real estate world. Casting a wide net may work, but having a broker on your side who has the network to cast that net out to makes all the difference. A well-versed business broker understands what a buyer and seller want and need within these restaurant transactions. Launching targeted social ad campaigns, and consistent contact and outreach are just a couple of the ways you want to market your business.
What kind of confidentiality does the broker or brokerage firm practice?
How can we expect someone to buy your business without looking “under the hood?” Accompanying buyers on the initial restaurant visit is a time-consuming task that many brokers may overlook, but it’s essential. If a broker simply gives you an address for a “drive-by” versus an in-person showing that is a major red flag.
In the realm of confidentiality, does the broker require Non-Disclosure Agreements (NDA) to be signed upon listing or viewing a property?
As a buyer or seller, respecting the confidentiality of this transaction is critical to a successful sale. Working with a firm or agent who values this by utilizing an NDA is a sign of due diligence and expertise!
We know choosing the right business broker to work with to buy or sell your restaurant can be an intimidating task, but if you hit these significant points, you can make a sound decision that suits your needs from start to finish.