1. FIRST CONTACT
Make That Phone Call
Pick up the phone and call us at BC Franchising
Consultants. Inquire about purchasing a restaurant,
coffee shop or business and tell us what you’re looking
for. We’re friendly and will welcome your
Tell us about your background, why you want to
buy a restaurant or business, tell us about your needs and
dreams of your own restaurant or business. We will require
you to sign a Non-Disclosure Agreement and complete
a Confidential Buyers Profile. BC Franchising
Consultants will in turn provide you with information
on various restaurants, coffee shops and businesses that
most closely meet your request.
2. FINANCING YOUR BUSINESS
Financial institutions are willing to lend money
to assist in the purchase of the restaurant or business, but
have certain processes and stipulations. Personal
sureties, securities of immovable property, and
your portion of the purchase from unencumbered
suretyships – you will be required by your
bank or lending institution, as well as the landlord,
to provide personal surety
– when borrowing for a business, a certain
portion of the assets may be used as security
for the loan, but the bank will require immovable
property too in most cases
cash – your contribution is to be free of
loans or debt
split between borrowed and own contribution of
the total purchase price is ideally 60% borrowed
to 40% own cash. This will ensure your “gearing”
on payments is affordable by the businesses profits
and above the Purchase price, there are Other
Costs to Consider
We will set up an appointment to meet with you
to discuss your needs and requirements and to
discuss the businesses we will present to you.
Our Business Presentations are comprehensive and
will disclose most of the relevant information
on the restaurant or business.
We value the business on historical figures and
establish a Price Earnings ratio (P.E.) to calculate
the selling price. Variables to this method include;
length of lease, condition of assets, fixtures
and fittings, profitability over the last 12-month
period with cash flows, historic figures and length
of trading history. Return on investment (ROI)
is based on how long it takes you to pay back
the purchase price from the profits of the business.
· 3 x P.E. ratio or a
33% ROI are the same thing – a 3-year payback
on the purchase price.
· 2 x
P.E. ratio, or 50% ROI takes you 2 years to pay
back the purchase price
You buy everything in the business;
lock, stock and barrel (this was in reference
to how rifles were sold, by the way). You take
ownership of the lease, all lease improvements
(electrical, plumbing, tiles etc), fixtures, fittings
and equipment, trading name, menu, concept and
goodwill are all included as part of the sale.
5. LEGAL PREPARATION
Before you enter into the purchase of a business,
first register a legal entity in which to trade,
a Close Corporation, or (PTY) Ltd. There are various
companies specialising in this, or online at www.cipro.co.za
, or contact your accountant. This process usually
takes three weeks.
We will provide you with Agreement of Sale document,
and after you sign it, is considered an Offer
to Purchase. Your attorney is encouraged to read
through this document for your benefit, to ensure
your best interests are represented. After your
offer is accepted, you will submit a deposit to
your attorneys trust account to acquire the business.
Your offer will have certain suspensive conditions
for you to fulfil; a due diligence inspection
on financial records, the assignment of the current
lease or negotiation of a new lease, financing
requirements and, if applicable, Franchisor approval.
Presentation of the
BC Franchising Consultants will present your offer
to the seller, if the price in within our mandate
minimum. We discuss the offer and sell the offer
to the Seller. Throughout the entire transaction,
our client remains the Seller. We will present
the offer we consider the best for the Seller,
and one that will be accepted
The seller will either accept, reject or counter
your offer. BC Franchising Consultants will notify
you of the seller's response. At this point you
may either accept, reject or counter the seller's
When both parties, Buyer and Seller, agree to
all of the terms and conditions of the sale and
the Agreement of Sale is signed, the offer then
becomes a purchase agreement signed both ways.
At this time there may be suspensive conditions
that still need to be completed prior to closing.
BC Franchising Consultants encourages you to include
your accountant and/or your attorney in reviewing
the transaction should you feel the need to do
7. DEPOSITS IN TRUST
You deposit a sum of 10% of the purchase price
to your or the Sellers attorneys trust account.
This amount is held in trust until all suspensive
conditions have been completed. You will also
need to provide the attorneys with copies of all
documents relating to the sale.
You will be given copies of the financial records
of the business for your review, or your accountant
will have access to the Sellers accountant for
verification of presented financials.
As your Suspensive Conditions are met, notification
is supplied to the Seller in writing. Once all
Suspensive Conditions are satisfied the purchase
agreement becomes a binding agreement.
The Effective Date is the date when ownership
of the business and physical possession of the
business is transferred to the buyer. The balance
of the purchase price is transferred to the Seller
by EFT prior to Effective Date. No money, no keys.
Arrangements are made for you and the seller to
take a physical inventory/stock-take on the day
before Effective Date, or on the morning of the
Effective Date. The stock is valued and, on agreement
of the total cost, payment is made within 7 days.
The attorney holding the Purchasers deposit transfers
the full amount to the Seller on the Effective
Date. Notification to release the deposit is given
by both parties to the attorneys by BC Franchising
You will generally be responsible for your own
accountants and attorney's fees in relation to