Is your Business Broker a member of BBF?

Why is it important for my business broker to be a member

of the Business Brokers of Florida?

·      Only members of the Business Brokers of Florida can post listings on the popular BBF Multiple Listing site, which is the primary source members use when searching for a business for a buyer.

·      All BBF members cooperate with other member brokers.

·      All BBF members will co-broker a transaction with a fellow member.

·      Would you list your home with a broker who couldn’t post the listing to the multiple listing service? A non-BBF member can advertise your business in many different ways, but he can’t advertise on the primary site used by most Florida Business Brokers.

·      There are more than 800 member brokers. Because we all cooperate the chances of finding the right buyer for a business or the right business for a buyer are multiplied.

Why a business broker may not be a member

of the Business Brokers of Florida:

·      The broker may not be a ‘joiner’ and just wishes to go it alone.

·      The broker may be more comfortable with residential real estate sales.

·      The broker may not be willing to pay the fees required to belong.

·      Because of a lack of experience, the broker may not have been accepted for membership. Many apply; not all are chosen.

·      Because of past experiences with BBF members; his or her membership application may have been rejected.

Under the laws of the state of Florida, anyone with a real estate license can represent himself as a business broker. This includes agents who focus on residential or commercial real estate. Real estate agents who are not members of the Business Brokers of Florida may have high ethical standards and the best of intentions, but their ability to serve business buyers and sellers is severely hampered because they are not BBF members.

Jon Hunt

Senior Associate

Florida Business Exchange

www.jonhunt.biz

jonhhunt@bellsouth.net

904-823-7225

Why pay full price for a franchise?

Should I buy a franchise? Maybe, but weigh all the options and then, if you decide a franchise is right for you, talk to a business broker about buying an existing franchise business instead of starting a new location. Why? You may be able to buy a successful operation for half the cost of starting in a new location.

I’m familiar with one franchise in which the startup cost is $330,000. I have a franchise under contract for $185,000. And it’s very successful with a great track record and the potential to continue growing revenue and profits.

Consider that in starting a new location you have no customers. No customers means no revenue stream. How long will it take you to break even or become profitable and at what level?

When the day comes that you want to sell your business you chance of recovering the full start up cost is slim.

With an operating franchise you know what the revenue stream is. During due diligence you can answer all your questions and learn everything you need to know in order to determine if the business is right for you.

Some of the advantages of a franchise are: Brand name, marketing support, corporate support, buying power and a lower failure rate.

Some of the disadvantages of a franchise are: it’s their way or the highway, royalties on every dollar and if there is a big black eye you’ll feel the pain…think Denny’s.

If you would like assistance in purchasing a successful business please contact me.

Beware of Letter concerning Annual Report

I received an official looking letter and form from Compliance Services letting me know of the requirement to file an annual report. The fee is $125. The letter is from Compliance Services, 400 Capital Cir. SE, Tallahassee, Fl.

THIS IS NOT FROM THE STATE OF FLORIDA.

Here is the warning from the official state site:

CONSUMER ALERT!   Please be aware that COMPLIANCE SERVICES (not to be confused with the Florida corporation, Compliance Services, Inc.) is mailing notices to business entities requesting that "Annual Minutes" and a fee of $125.00 be sent to them for filing. These notices are NOT from the Dept. of State, Division of Corporations. "Annual Minutes" are NOT required to be filed with any agency. They are to be kept by the business entity itself. Do NOT confuse these notices with the messages sent by the Division of Corporations reminding each business entity to file its 2011 Annual Report.

Avoid Lease Surprises

If you are preparing your business for sale your lease is a key element. Ideally you have a lease with a favorable rate and lots of life left before expiration. But here's a question you may not want to answer. When was the last time you read your lease? In all probability it's been a long time and there may be some unpleasant surprises hidden deep in the lease.

Recently I've had two experiences in dealing with leases that haven't been pleasant.

In the first the seller's lease, which was expiring, had a provision that should he sell the business he would owe the landlord 10 percent of the sales price. The seller knew about about the provision, but he expected the business to be worth a great deal more than he paid and he was willing to accept the provision. Sadly, it was worth a great deal less. A new lease for the buyer ran 32 pages, contained multiple duplications and, initially, required that he maintain property insurance on a building that contained more than a dozen other tenants. We later learned the landlord paid $3,800 to have the lease drafted.

I am now working with a seller and we have the business under contract. He has a great lease, but when I asked when if he was familiar with the provisions of the lease he admitted he hadn't read it since he signed it almost three years ago. I had the duty to inform him that he was required to pay the landlord $1,000 to consider an assignment of the lease and another $2,000 if they approved the transfer.

I don't know that any of these provisions could have been changed when the initial draft of the lease was presented. I do know that if you don't ask, you don't get. Landlords often don't have the upper hand in this business climate and it doesn't hurt to try to negotiate. While the amount of the lease is important there can be other provisions that may have a huge impact when you consider selling your business.

While it may be advisable to have an attorney review a proposed lease there is no substitute for reading it yourself.