WHO CAN YOU TRUST WHEN BUYING A BUSINESS OR FRANCHISE?
Butch said to the Kid- Who Are These Guys?
Since most people have never bought or sold a business they are not familiar with potential players and how they may relate to the deal. Let’s identify the new players and their roles.
1. Attorney and CPA. I have bought and sold businesses and franchises personally. Even though I broker both, I use the services of my CPA and attorney each time. Each deal has contracts and tax implications I need professionals on MY TEAM to advise me on. You should be comfortable with both these professionals. If you are not, interview others until you are. In our practice, we require both parties to have legal and financial counsel.
2. Business Broker. A Business Broker takes a listing on a business just as a residential real estate broker would take a listing on a home. Most states require such a Broker to have a Real Estate license while others require it for only principals of the brokerage company. In some cases with no real estate involved, no license is required. The Business Broker will represent the business to you in the most favorable terms. He will pass along materials and numbers given to him by the seller. You must do your own verification of materials given to you. The Broker can be valuable to you because it is his job to take all offers to the Seller and keep personalities out of the negotiations. He may also know lenders or actually have the business prequalified for a loan. A good broker makes the acquisition smooth and understandable to parties. You must remember, his commission is paid by the seller. Have your CPA and Attorney advise you. They are on your team.
3. Franchise Broker. A new form of Broker has entered the arena over the past few years. These are Franchise Brokers. Not state license is generally required. Over 2500 Franchises exist today with only a few having the size and resources to represent their interests nationally. Franchise Brokers find interested parties and interview them based on desire and capability. They then recommend certain Franchise opportunities. If a Franchise is awarded, they make a commission. A good Franchise Broker does a thorough confidential job of interviewing prospects and finding the right fit. I am asked- If I do not use a Broker can I save money? Rarely, you see Franchisors publish the franchise fees for the entire world to see. They do not wish multiple prices. Further, if they do not use a broker, they simply pay the commissions to their in house team. Since the Franchise Broker only gets paid if you are awarded a Franchise, he is essentially a free resource to you and on your team. However, you must still do your homework and involve your team.
Some have found becoming a Franchise Broker in advance of buying a Franchise offers a look down opportunity for hundreds of franchises they never thought possible. Plus, they save the commission should they buy a given opportunity. Companies such as www.Thefranchiseauthority.com offer programs to become a franchise broker.
4. Buyers Agent Broker. RMBA offers a consulting service for any business or franchise you wish to investigate and/or pursue. We will be on your team and advise you regarding value, terms, and negotiations. We establish a legal professional relationship with only your interests in mind.
BEFORE YOU MAKE THE DECISION OF YOUR LIFE KNOW JUST “WHO THOSE GUYS ARE”
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