Franchise Purchase

[Adam T]

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]

Is she taking over the previous owner's debts?

[Adam T]

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]

I hear alarm bells ringing already.

[Adam T]

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]

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]

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]

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.