Steps for Selling a Restaurant: Preparing for the sale

Steps for Selling a Restaurant

The steps for selling a restaurant are similar to cooking.

For the best results, follow a proven recipe.

The French phrase mise en place, “Putting everything in its place,” is just as relevant when selling a restaurant as it is in your kitchen.

Carefully following the steps for selling a restaurant are key to a smooth transaction.

In this first stage of the selling process, you’ll:

1. Complete a Seller’s Disclosure Statement
2. List your assets
3. Review your lease for important clauses that could impact selling your restaurant
4. Gather and prepare all vital documents
5. Establish a confidential way for buyers to contact you

These are the most time-intensive steps for selling a restaurant, but following these steps now will save you a lot of time later.

By the end of this section, you’ll have your documents prepared and you’ll be ready to begin the search for a buyer.

Let’s get started.

Steps for Selling a Restaurant-Step 1

Action Plan

Complete the Seller’s Disclosure Statement.

Selling a Restaurant-Step 2

List of Assets

The Asset List itemizes which assets the buyer can expect from the sale. Providing the asset list upfront prevents tense last-minute renegotiations over assets that the buyer believed were included in the sale.

You don’t need every little detail, but a simple description of each item and its make or model is helpful. This list is also useful if you need to justify the value of the assets — you can quickly contact equipment vendors to price similar new and used equipment.

Action Plan

Complete your Asset List.

Selling a Restaurant-Step 3

Lease Abstract

A Lease Abstract is providing a summary of the essential terms of your Lease Agreement.

It will be included in your marketing package and is also useful to quickly answer questions about your Lease Agreement.

This step requires special attention, because the lease agreement is one of the most critical items considered by buyers, and one of the biggest reasons sales fall apart.

Carefully read your Lease Agreement and create a Lease Abstract using the sample below.

Do not skip this step! You need to know in advance if any items in the contract will prevent the sale of your business or impact the price.

There are a few vital lease clauses that can impact your ability to sell and the price you receive.

• Lease Assignment
• Options to Extend
• Use Clause

Action Plan

Download Chapter 1 of “Why Most Restaurateurs End Up Flat Broke-Avoid Profit Sucking Commissions Sell Your Restaurant Without a Broker”

Step 4

Prepare Documents

Just like the steps above, a little preparation on your part will significantly increase the speed of the transaction.

Gather the following documents:

• Lease and any amendments to lease
• Licenses
• Permits
• Architectural plans
• Certificate of occupancy
• Conditional Use Permit

Photocopy or scan any materials that may be requested by a potential buyer or transfer with the sale. Scanned documents are preferable.

Nobody wants to search through their garage or old file cabinets for hours when a potential buyer requests a vital document.

Copy all your materials ahead of time so that you can provide them quickly and easily.

Note: Do not provide original architectural plans, licenses, or permits to any prospective buyers.

If requested, make copies and keep the originals until the close of Escrow.

Step 5

Contact Information

You need a confidential way to communicate with potential buyers without disclosing the name or location of the business until you give your approval.

Do not use your work email address or phone number.

Set up a free email account, do not include your business name in your email address.

If you plan to include a phone number, use your cell phone.

Summary

Sellers Disclosure Statement

The Sellers Disclosure Statement will clarify what representations you’ll make regarding the business.

List of Assets

The Asset List itemizes which assets included in the sale.

Lease Abstract

A Lease Abstract is a summary of the essential terms of your Lease Agreement.

Prepare Documents

Gather all of the following documents and make copies or scan into digital documents:

• Lease and any amendments to lease
• Licenses
• Permits
• Architectural plans
• Certificate of occupancy
• Conditional Use Permit

Contact Information

A confidential way to communicate with potential buyers without disclosing the name or location of the business is needed until you give your approval.

Set up a free email account, do not include your business name in your email address.

If you plan to include a phone number, use your cell phone.

If you’ve completed all previous steps, you’ve already finished the most time-intensive part of the sales process.

 

Let’s move on to How to Sell a Restaurant Part 2: Marketing Your Restaurant for Sale.