How not to buy a Franchise

Submitted by Fayaz on Mon, 03/09/2009 - 3:25pm.

Here is an e mail inquiry that was forwarded to me ..................
 
 
Dear Mrs XXX,
 
When I have been searching ........... website, I have been found many subways for sale in every state. I have also found that you would like to sell a Subway.
 
I was an investor and I have been involved into fast food business since long. I have a great knowledge about how much would be cost to build a new Subway. Also I have great
knowledge what would be the selling price according to weekly sale of the final products. If you would like to offer me a good price, I would like to buy your Subway. At this moment, I have two questions as follow.
 
What would be best price for selling your Subway?
 
What was the total weekly sale for your Subway?
 
I have your phone number. If you set a very good price to sell, I would give you a call and make further progress.
 
I am looking forward to this notion and have a good day.
 
Thanks, xxxxx
 
 
Points to ponder on - my comments
 
-He is shopping in every State, and is not focused yet
-He is an investor-bad sign
-He knows the cost of a new Subshop-that is rather irrelevant today. You are buying cash flow....On my Subshop franchises for sale page, I have a Subshop that cost $160,000 to build and seller wants $65,000 for a cash flow of $45,000. On another Subshop, say it cost my seller the same $160,000 he wants $550,000 and his cash flow is $170,000.........10 years ago I was offered a Subshop for $5000..........get the picture?
-He has "great knowledge of the selling price".....in other words he has heard of a "multiple" used for this Subshop. It is a start......but not the final word on valuation
-He wants the seller to offer a good price in a seller's market.........keep waiting buddy. If you want a really good price, go buy a Quizno's; they are giving them away, and you may get two for the price of one if you buy on a Tuesday after 4pm. or if it is raining. Then let's see who gets toasted.....
-He will call IF the seller has a good price........of course the seller has a good price; just for you. But what do you consider to be a good price, Mr Buyer? By the way, Mr Buyer, the price will go up in 6 months as the Store sales increase, based on your own weekly sales multiple !!!
 
Excuse my French here, but what the XXXXX.......?????? Would anyone like to respond to this gentleman before I do ? post your comments on this blog or write to me and I will share your sanitized thoughts with my website viewers
This is precisely the kind of inquiry that a Business Broker dumps in the trash without responding as it just wastes his precious time. Yet I believe this guy may be the nicest guy in the world who just needs an education in how to approach a business seller, how to sell yourself as the perfect buyer, how to analyse the details provided, and how to buy the business safely. Or I can just hold his hand through the buying process. Think of it as his first date; instead of breaking the ice and making progress he only managed to break wind and foul the atmosphere......a maloderous event indeed!!   fayaz@mrfranchiseman.com, 949-253-4610

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