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Ice Cream Franch 4sale-help To Find BuyersPremium Member
Posted By: W.M.M.A. on 11/6/2006 5:59 PM (CST) 2500 Points
Hello Everyone:
One of my clients in Houston, Texas is seeking a buyer for their successful Carvel Ice Cream Franchise. Located in West Houston area, a rapidly growing, upscale area, near a new high school, and in the largest "major" grocery chain, shopping center in the area, this location gets a lot of traffic.

Want to sell so they can spend a few years traveling.
They are asking less than half of the annual gross sales figures. They are using a broker, and get some leads, but the people coming in are not completely, financially qualified.

I have been asked to help find buyers, outside of the usual channels for selling franchises. As you may know, those markets are extremely crowded.

What can I do to help this client?
Do any of you know of anyone who would want to move to this metropolitan area of Texas? What are their options, so that they reach more qualified buyers.

The selling price is less than $100K, which is approximately $300K less than a new franchise. I think this is quite a bargain, for an existing business w/a growing client-base.

Any ideas are greatly appreciated. Or, if you know of anyone, please respond.

As always, your collective expertise is greatly appreciated.

Randall
WMMA

Posted by: KathySmithFilms* Accepted Answer
11/7/2006 4:23 AM (CST)
Hello Randall,

I am going to ask my best friend Stan Gerson who buys and sell buildings if he has leads and I will post back.
Kathy
 
Posted by: thinkmor Accepted Answer
11/7/2006 4:57 AM (CST)
Hi Randall

How are you?

If your client is getting poor quality leads then look at using other brokers that have a proven recent track record. Alternatively, you could also look into getting buyer financing for potential buyers if that is a problem.

Randall, you said the seller wants to sell to go off travelling, are they prepared to work a transition period for the new owner as this is quite normal and could put prospects off? Is travelling the real reason for selling or do the reall reasons for selling need to be unearthed?

Have they clearly identified who the potential buyers are?

Most buyers are looking to buy a good business that could become great and if you're looking to buy a 'good' business you will realistically pay a 'fair' price not a cheap one. You need to understand the sellers past, present and future potential of the business to get the best asking price.

Why is the business 'cheap' if it is successful? Even if I wanted to sell a successful business I would wait for the 'right and fair' price and delay my 'travelling' but there is NO WAY I would let it go 'cheaply'. Why should I unless there is something inherently wrong within the business or there are factors which are not disclosed?Any sensible business person will ask the same question.

Even if there are genuine reasons for the 'low price' the perception will always put negative questions in buyers minds so this may need addressing to move the business into a perceived 'good and attractive' asking price.

How long has the business been up for sale? Often, the moment the seller decides mentally he/she wants to sell the business is sold then. This usually means they have taken their 'eye' off the business and the longer the time the worst it could be for the business.

I assume your client or broker have already approached competitors locally or regionally? Alternatively, you could approach them directly.

Have they already approached their family and friends for referrals or even asked if they would be interested?

Business sales listings are common on the net and you may have already tried these too.

Local business listings in local and regional publications could be an option but you would need to match to the profile(s) of your new buyer.

An advisor at the Local Chamber of Commerce may be useful to increase word of mouth especially if they are well connected.

As always, the better you understand your potential buyers, where they frequent and how they filter information through media and networks the better chance you will have targeting them.

This is assuming due diligence of the business and future potential will stack up and a transition period is agreeable.

I'll repost with anything I may of missed and appreciate your feedback.

Kind regards

Zahid Adil
 
Posted by: W.M.M.A. Author Response
11/7/2006 7:30 AM (CST)
They will stay through transition. This will be very friendly. Buyers are identified. Great for retired couples, or young yuppy types.
Good to hear from you.

And, the price....so low, I almost bought it, just to resell it for $10K more in a quick turnover.

Randall
WMMA
 
Posted by: telemoxie Accepted Answer
11/7/2006 7:31 AM (CST)
Other than the franchise shows and magazines, I don't know what the "usual channels" are for selling franchises, so I don't know if these are fresh ideas -

... but if I were trying to sell such a franchise, I'd call Bill Gaul of The Destiny Group (I'd done a small project for him some time ago...).

Bill helps veterans transition to the workforce, and has a number of informative and helpful sites... including information about franchises. It seems to me that this sort of opportunity could be idea for a retiring veteran... and they represent a large class of folk who are looking for something to do and a place to live... he's a helpful sort of fellow, and well connected... and so if this is a great opportunity, he can probably help you get the word out.

... along a similar line, outplacement agencies could be worth a call... as well as retirement counsellors in the Federal Government... as well as personnel offices of large companies offering bonuses for early retirement...

Tell Bill I said hi... his site is http://www.destinygrp.com/destiny/index.jsp
Good luck.
 
Posted by: Made Accepted Answer
11/7/2006 10:30 AM (CST)
Well, the first thing I would do is to go to other current Carvel franchise owners and see who wants to double their business.

I am also in thinkmor's camp ... if this is really going for less than $100k, which is $300k less than a new one (?????!!!!!!!!), then there must be something seriously wrong.

So if there are no other current Carvel or maybe even Subway franchise owners who are not interested (and if this is the case, there must be something really, really wrong), the next thing I would do is:

Raise the price. A lot.

I just read the rest of thinkmor's response, and I think he is saying the same thing. If you found a $400,000 house in seemingly great condition going for less than $100,000 what would you do? Some jump at it, others would never touch it, thinking there was something wrong. Remove the image of there being a problem, and maybe this sells a lot faster.

If that does not work, then get the owners to get a "due dilligence" done on the business. This will help your unqualified leads to become qualified at banks ... if they have this in their hands when they go for financing, there should be no way they will get turned down, unless they have a terrible credit history.

A decent broker should not have a problem selling this, their email distribution list should already contain several buyers.

Cheers!
 
Posted by: W.M.M.A. Author Response
11/7/2006 11:50 AM (CST)
There's nothing wrong. They make a profit. Their initial thought was that this would be a great opportunity for them. They had no idea that it would take so much commitment of time.

They do not like working with "kids" and performing all the hiring tasks...it's like anything else...they made a bad decision and didn't research properly.

The price was high, and they got nibbles, but there are other opportunities they wish to persue.
Nope...they just want out, and get back to California...and travel.

Good idea on the other franchisees though.


Randall
WMMA
 
Posted by: Jo Masterson Accepted Answer
11/8/2006 10:27 AM (CST)
I have good luck with selling two businesses to smaller companies in similar industry who may want to grow.

Contact others who own similar business but could benefit your the name or location.

good Luck,
Jo
 
Posted by: W.M.M.A. Author Response
11/8/2006 10:32 AM (CST)
Thank you. May I ask a favor of each of you?
Would you contact any person/group you know who may have interest in such a venture, and have them contact me?

Thanks a lot.

Randall
WMMA
 
Posted by: Frank Hurtte Accepted Answer
11/8/2006 10:49 PM (CST)
Randall,
A good place to sell a business like this is by networking with the folks who handle outplacement of high power sales and executives. I have worked with these people in setting values for distributors and dealer organizations. There still seems to be a lot of these guys floating around.
 
Posted by: Shelley, MProfs Moderator Response
11/9/2006 1:59 AM (CST)
Hi, Randall! Sometimes I think I must be spending $100k on ice cream for my daughter each year. She's nuts for the stuff.

Maybe I should buy the Carvel place so we've got our own supply here in Houston?

Just kidding. Nice to see ya on KHE, stranger...

Shelley ;]
 
Posted by: W.M.M.A. Author Response
11/9/2006 5:44 AM (CST)
Hey Shelley...if there's a stranger, it's you, because you have done an incredible job on KHE...the entire staff has done wonders. I do not know how you rate this, but it has to be in the top of all marketing sites.

The owner just sent me another synopsis. They were CFO of large insurance company and thought this would be a great side-gig...NOT.

She hates the work ethic of teenagers, and adults can't work there because of the money. She just wants out...and, will sacrifice it all.

Wonderful to hear from you.

Randall
WMMA
 
Posted by: W.M.M.A. Author Response
11/9/2006 5:46 AM (CST)
Thanks, Frank. Good Idea.
 
Posted by: ASVP/ChrisB Accepted Answer
11/9/2006 7:01 AM (CST)
Randall

Have you read the franchise agreement your friends signed when they bought the place? Maybe there's a "put" option back to the head office of Carvel?

If it's profitable, but it really isn't working out the way they wanted, I'm sure the company would take it back at a good price to give them the opportunity to resell it to another punter at full price... That way Carvel gets two licks of the ice cream!

If it isn't as profitable as it was represented to be in the pro-forma disclosures, they may be able to force Carvel to take it back anyway and refund their purchase price.

Worth investigating... Sometimes those lawyers can be on your side too, you know...

Cheers good buddy.

Chris B
 
Posted by: W.M.M.A. Author Response
11/10/2006 4:20 PM (CST)
Well, thanks all who participated. I am sharing points equally to all.

If you have anything else you would like to add, please do so. Thanks a lot.

Randall
WMMA
 


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