Franchise Purchase

Author
Discussion

Adam T

Original Poster:

1,300 posts

212 months

Wednesday 27th February 2008
quotequote all
My other half has the option to purchase her previous employers Franchise for a considerable sum less than it would cost to purchase form the Franchisee Company.

I have found out that the valuation is based approximately on what the previous employer owes. I clearly understand that these two variables have no corrolation whatsoever and this is clearly not how you valuae a business worth.

The only other issue is that she cancelled most of her clients - clearly de valuing her business (?)

I can see the potential in the franchise, especially considering the "sale" price.

Do people have any ideas how I/we can go about purchasing the franchise, and atleast trying to obtain a proper valuation on the business?

I am currently proposing to set up a meeting with the franchise owners, and the franchise Comapny.

It may be a nice little earner for the other half, and also means that what she works for, she earns. More in, More out.

Many Thanks

Adam.

Eric Mc

122,789 posts

271 months

Wednesday 27th February 2008
quotequote all
Is she taking over the previous owner's debts?

Adam T

Original Poster:

1,300 posts

212 months

Wednesday 27th February 2008
quotequote all
Eric,

thanks for your response; this is clearly somehting that needs looking into, in some depth - I know from re search that she personally has been declared bankrupt and that another family member administers the business - which as I am sure you will agree Eric ads another dimension to things.

My first port of call is asking for her accounts, and to have a meeting to run through the business generally. I would also hope to meet the owner of the Franchise company.

It only came about this morning, so will update as and when people post and I find more out.

Thanks

Adam

Eric Mc

122,789 posts

271 months

Wednesday 27th February 2008
quotequote all
I hear alarm bells ringing already.

Adam T

Original Poster:

1,300 posts

212 months

Wednesday 27th February 2008
quotequote all
I have a few..

Is there a way/method of becoming totally removed from her personal businessmistakes - i.e, not taking on debt etc and starting "afresh" Eric?

Purchase a "new" franchise that is totally removed from her?

I dont know all the details, which doesn't help. Hopefully know a little more later.

Thanks

Eric Mc

122,789 posts

271 months

Wednesday 27th February 2008
quotequote all
If her "franchise" is "poisoned" in some way, I would first want to check out what went wrong.

Was her bankruptcy linked to the franshise or some other non-business reasons?

Why does she appear to be selling so cheaply?
That's why I asked about the business debts. British Airways bought Dan Air back in 1987 for £1 - but they inherited all the liabilities owed by Dan AIr, which they had to pay, of course. So the true cost was a lot more than £1.

Has she produced meaningful and useful accounts that show the true trading position?
I would want at least three year's figures.


Edited by Eric Mc on Wednesday 27th February 13:59

Adam T

Original Poster:

1,300 posts

212 months

Wednesday 27th February 2008
quotequote all
Thanks Eric.

I will ask to see her last 3 years accounts, and clearly ask the question regards her bankrupcy.

I certainly do not want to be taking on any poisened challace. I would much prefer it to be a nice little frnchise for the other half to wokr for, and get something out of.

Ill post later when I know a little more.

Thanks

Adam

Adam T

Original Poster:

1,300 posts

212 months

Wednesday 27th February 2008
quotequote all
Eric,

I shall defeinately ask for the last 3 years accounts etc. I will also try to ascertain why she went bankrupt etc and why.

Ill post later once I know some more.