Are you considering owning a Restaurant Business?
Unless you’ve bought or sold a business in the past, you’ll find that buying a restaurant for sale can be at times an overwhelming experience. That’s why it is important for the prospective buyer to be knowledgeable about the process and to follow our simple steps outlined below when considering purchasing one of our restaurants for sale. Thoroughly understanding the process will assist even a veteran of restaurant business transfers in working with all parties involved.
Before receiving sensitive confidential information, Buyers must first sign a Non-Disclosure and Confidentiality Agreement. These agreements protect the prospective Buyer from having anyone such as an employer, employees, or the competition discover about the proposed acquisition prematurely. It also protects the Seller against unnecessary problems with customers, employees, vendors, competitors, landlords, bankers, creditors, etc.
In many cases funding is required to complete the purchase. In addition, our Sellers have asked us to pre-qualify their potential Buyers before delivering their financial documents or setting up a face to face meeting. Therefore, it is necessary for us to verify that the prospective Buyer has the ability to purchase with cash and/or is pre-approved through a financial institution. We do not require you to send us sensitive information like bank statements or account numbers. In most cases we just need a letter from your bank stating you have the ability to purchase for the full amount or that you have been pre-approved for financing. You can also review more Financing Options Here.
After reviewing the restaurant for sale, and financial data, if the prospective Buyer determines that the business presents a desirable opportunity the Buyer should arrange a face to face meeting with the Seller to explore the business, learn operating procedures, and gain additional insight.
After meeting the business owner and visiting the restaurant for sale, the next step is to present an offer of purchase for the business. Making the offer can be made at any time during the above process, and should also be noted that it is not the final step. In fact, it should be viewed as the first of several steps, each of which bring the Buyer and Seller closer to completing the transaction. Note: It is the prospective Buyer’s duty and obligation to verify the accuracy of the Seller’s representations.
Once a selling price for the business has been agreed to, it is now time to execute a purchase agreement between the Buyer and Seller and place a good faith deposit into escrow. Next, if the business is a franchise, the Buyer must interview with the company and get approval for the purchase of the business. If financing is required, a credit application must also be submitted for approval.
Also referred to as “Earnest Money” is required for generally 9% of the selling price or $9000, whichever is greater. This is usually placed in an escrow account or with a third party. The good faith deposit should be made at the time you sign the purchase agreement.
Once the Buyer is approved by the company and for financing (if applicable), it typically takes 6-8 weeks for final paper work to be drawn up and signed. This period of time will be considerably shorter if the restaurant is not a franchise. A final meeting time will be established to sign the closing documents, and the exchange of the business and money will take place between the Buyer and Seller in the form of a certified cashier’s check. After a successful closing, the good faith deposit will be released from the escrow agency.
Disclaimer: Restaurants For Sale is a Broker that brings buyers and sellers together. All agreements are made between the buyer and seller and not Restaurants For Sale. The above outlined steps are simply recommendations to make the buying and selling process go smoother. It is the prospective Buyer’s duty and obligation to verify the accuracy of the Seller’s representations and if necessary retain attorneys, accountants, business appraisers, or other professionals.