A client asked me recently to look at an automotive franchise opportunity for them to see what I thought.
I hope this can be of help to anyone trying to build a new business or looking to buy a franchise from a business franchise broker.
Hello (we will say her name is Cindy)
Sure I would be happy to look over the franchise broker and agreement for you:
Some time latter…
Given the valuation on the investment instruments offered I would expect a much more visually appealing website especially if a business broker is receiving upwards of 1/2 mil from someone/client for a business.
Even though I did a profile review on the broker and didn’t find any bad reviews it could just mean no one has found enough confidence in the business broker to post any reviews on him positive or negative which is kind of a flag.
On his website he has most of his inventory sold yet no reviews, how is that???
Also in consideration of the NDA and document that was presented to you it has a dated look and feel to it showing the lack of technical support for his business infrastructure and in the end his clients (you).
It is my recommendation not to do business with the mentioned broker and build out a business for yourself ultimately saving hundreds of thousands of dollars in interest and loan fees as well as principal payments. Put that money instead into building out a rock solid name for your own company.
If a broker actually is in possession of “the books” to a business and can prove viability of business model, then most will without you having to expose so much personal financial documentation prior to sale or acquisition of a business or property.
It can seem enticing that all the hand holding check marks are made for you and you can seemingly just walk into business ownership but rarely is that the case in reality.
For example if you purchase a property without a relator then you save 10’s of thousands potentially.
Likewise in a business, buying without a broker and purchasing business direct you save potentially much, much more. The brokers only interest in you is his commission and not letting you know what’s “really” under the hood of the business.
If you build a name for yourself without buying a franchise then you know what you have from step one and are not libelous in a potentially fractured business brokers are just selling to make money and “cooking the books” for you the potential business owner so as to just get you in the hot seat while funding them.
Again, this is my opinion. If what was presented to you was presented to me I would decline immediately but only because I know how to get a person like myself or another into a corporation with positive cash flow in 6 months with $50,000 and more in business credit where you will not be in debt to a franchise dealer while trying to make profits. In this model (buying from a broker) you are set up to fail, always worried every month how you are going to pay the interest on the loan as well as the principal while dealing with getting acclimated to a new business model and dealing with overhead, overhead & more overhead in running costs.
My 2 cents. Please feel free to text or call me for more information.
Senior Account Manager
MBA Candidate Class of 2012
UC Irvine – The Paul Merage School of Business
Marketing and Strategy
ipower credit services