Making An Exit

QSR Magazine | March 2016 | By Jessie Szalay

Whether retiring or moving on to new pursuits, the day will come when it’s time to sell your business. Here’s what you need to know.

Guillermo Medellin has owned his three Russo’s New York Pizzeria stores in Houston for six years and business is going well; Medellin and his team turn out pizza to a steady stream of customers every day.

 

But he’s already preparing for the faraway day when he decides to sell his business.

 

Medellin wants to make sure he’ll profit from the sale as much as possible, that the process will be smooth, and that he’ll leave well-running, community-oriented restaurants behind. To do that, he’s keeping meticulous records, working hard to build equity, foraging strong community bonds, and ensuring all his titles and leases are transferable.

 

Medellin’s commitment to thinking ahead comes from first-hand experience in buying and selling businesses. He previously owned manufacturing plants and another restaurant. His family members were fans of Russo’s food but didn’t like the service at a particular location, so when it went up for sale, they decided to buy it. Things went well, and they acquired two more restaurants. “We’re not considering selling right now; we’re just building equity in our business,” Medellin says. “It’s always on our mind, because at one point or another, we’re going to be in a situation to sell it.”

 

He keeps thorough records on how money comes in and where it goes. He tracks phone records; personal, discretionary, and essential business purchases; tax returns; and lease agreements.

 

“You want to do everything in your power to get that business running as well and as profitably as possible to make it attractive to a buyer,” says Bob House, general manager of BizBuySell, an online marketplace for business buyers, sellers, and brokers. Business owners should consider improving the curb appeal of their restaurant, making renovations, working with a PR firm, and doing what they can to improve reputation, as these things can improve the selling price.

 

Maintaining good records should be a key component in every business owner’s long-term exit strategy. In fact, Russ Bieber, vice president of sales and training at broker Murphy Business & Financial, says detailed bookkeeping is so important that if a seller comes to him with messy records, he will advise maintaining the business for another year to get things in order.

 

When someone comes to Murphy Business looking to sell, a broker analyzes the business’s financial statements, as well as sales information for similar businesses, to come up with a likely price range. When financial statements are incorrect, the estimated selling price becomes incorrect, as well.

 

“It’s like when you’re taking the test: If you have the answer in your head but you don’t write it down on the paper, you’re not going to get credit for it,” Bieber says.

 

Some restaurant owners undervalue their business because they don’t count all the cash flow or they deduct personal expenses. Others overvalue their business because of the amount they’ve put into it.

 

When it comes time to sell, restaurant owners have to decide whether to use a broker. The process of marketing and selling a business is long, complicated, and daunting, and a broker acts as a guide and advocate through it. House, whose business BizBuySell hosts some 40,000 active listings, says a broker allows the operator to run the business while someone else focuses on selling it.

 

Brokers also bring marketing strategies and networks of buyers. Steve Zimmerman is president, CEO, and principal broker of the California-based Restaurant Realty Company, as well as author of the book Restaurant Dealmaker. In addition to the expertise that comes with dealing exclusively in restaurants and nightclubs, Restaurant Realty Company boasts a database of potential buyers with whom Zimmerman keeps in regular contact through weekly and quarterly newsletters. These kinds of networks help brokers find the right match of buyer and seller.

 

For any type of restaurant, the prospective buyer’s financial viability is the most important factor in making that match. Experience is equally key when it comes to buying independent restaurants.

 

“Landlords are skeptical of dealing with newbies,” says Zimmerman, whose firm only deals with independent restaurants and nightclubs. “[Buyers] must have cash, good credit, … three to five years ownership or management experience, and food finance experience. Dealing with the landlord is the biggest hurdle, so we screen buyers from the perspective of a landlord.”

 

Other factors that go into a good buyer-seller match include the buyer’s location preferences and personal financial needs.

 

Zimmerman, House, and Bieber all advertise listings confidentially, meaning that the name and address of the business and its owner are not advertised. Bieber says that if customers know the restaurant is for sale, they may not come by anymore because they think the owner’s given up, and employees sometimes quit and find new jobs.

 

Secrecy often permeates the entire process. For example, Zimmerman’s brokerage firm requires each potential buyer to fill out a confidentiality agreement and undergo screening before being given the business name and address. Then, the potential buyer is instructed to go the business as a customer during a busy period. Next, the broker will set up a time to meet with the owner. Zimmerman emphasizes that all meetings take place discreetly, in out-of-the-way locations.

 

Buyers don’t see the books and records until an offer has been made. The broker writes an offer, which the seller accepts, rejects, or counters. The agreement includes some contingencies, like transfer of licenses, inspections, approvals of landlord, and financial review of books and letters, Zimmerman says. In business, it’s common for a broker to represent both buyer and seller.

 

“Dual agency exists because there aren’t a lot of restaurant brokers,” Zimmerman says. “When you get a residential broker or someone who doesn’t have restaurant business brokerage experience, it adds complications and time. Time and surprises are the biggest things that kill deals.”

 

Once the sale is final, the seller trains the buyer in running the business. Training usually lasts a month or two, Bieber says, and is done in both independent and franchise restaurants.

 

After that, someone like Medellin will walk away from the restaurants he nurtured and move on to his or her next adventure.

Murphy Business & Financial Corporation LLC to Present Franchise Resale Program at 2016 International Franchise Association Convention

Franchising.com | February 2016

 

Rapidly Expanding Business Brokerage Firm Assists Franchisors and Their Exiting Franchisees with Structured Franchise Resale Program

 

CLEARWATER, Fla. – Murphy Business & Financial Corporation LLC, one of the largest business brokerage firms in the nation, today announced plans to showcase and discuss its franchise resale program at the 2016 International Franchise Association Convention, which is taking place at the Henry B. Gonzalez Convention Center in San Antonio from Feb. 20 – Feb. 23.

 

Created with the intention of supporting franchise development teams throughout the U.S. and Canada, the structured program enables exiting franchisees to resell their franchise with the support and guidance of Murphy Business’ experienced broker network.

 

"As a franchisor, I understand that a healthy franchise system is one that is constantly selling new franchise units and bringing in fresh energy and new faces." said Roger Murphy, president and CEO of Clearwater, Florida-based Murphy Business & Financial Corporation LLC. "Like any business, franchisees will eventually desire to exit their business due to retirement or some other life changing event. It’s important to consider the support you have for exiting franchisees as well.”

 

The Murphy Business & Financial Corporation LLC Franchise Resale Program takes the onus off of franchisors by allowing them to focus on selling new units, rather than reselling existing units. Through the program, each franchisor is assigned a seasoned professional to be the point person for all matters concerning franchise transfer processes. Franchisors are also relieved of the liability of going through the sales negotiation and business valuation process, as these transactions are, in some states, heavily regulated under real estate or business brokerage laws.

 

“There is more value in having a franchise resale program that transcends offering assistance for exiting franchisees,” said Murphy. “A structured franchise resale program also adds value to the recruiting process by showing candidates that the franchisor is not only interested in bringing them into the system, but also supporting them when they are ready to exit the system. For today’s franchise developments teams, this is an invaluable asset to offer.”

 

For more information about Murphy Business Financial Corporation LLC and its franchise resale program, please visit: www.MurphyFranchiseResale.com.

 

About Murphy Business & Financial Corporation

 

Clearwater, Florida-based Murphy Business & Financial Corporation LLC is a full-service business brokerage firm facilitating business sales, purchases, consulting, valuations, mergers and acquisitions. Closing deals at a higher ratio than the business brokerage industry average, several accolades have been bestowed upon the company including Top 50 Franchisee Satisfaction Award-Winner 9 consecutive years according to Franchise Business Review.

6 Steps to Steel Yourself for Tough Times

Business News Daily | February 2016 | By Nicole Fallon Taylor, Business News Daily Assistant Editor

 

Plummeting sales. PR disasters. Piling debts. Lawsuits. Layoffs. These are just a few of the many potential tough situations an entrepreneur might face — and that's just on the business side. Illness, family deaths, relationship issues and other personal problems can weigh heavily on a business owner's mind and make it really difficult to carry on with day-to-day operations.

 

You may not have faced a significant hardship while running your business yet, or perhaps you've made it through one (or more) and wish you'd handled things differently. Either way, it pays to be prepared. Here are six steps you can take to soften the blow if — or, more likely, when — you find yourself facing tough times.

Build up your confidence

Difficult situations will undoubtedly shake your confidence as an entrepreneur, so it's important to have a strong reserve of it to begin with. Bill Redfern, founder and CEO of Global Franchise Opportunities, credits his ability to deal with tough circumstances to his strong belief in himself and his own abilities.

 

"As businesspeople, we face many challenges each year, and sometimes, day-to-day work can make things seem rather bleak," Redfern said. "I have found that having a high level of confidence during tough situations helps to find a creative solution to the issues or challenges at hand. Entrepreneurs sometimes do [their] best work when under this sort of pressure."

Create a strong support network

When you've fallen on hard times, it's easy to let yourself become weighed down with negative thoughts. Erik Wilson, founder and CEO of Pozify, urged fellow entrepreneurs not to let this happen. One way to pull yourself out of a negative mind-set is to connect with people who push you to be your best, most confident self.

"Surround yourself with people who want to be with you and who help you stay accountable, authentic, honest, happy and open-minded," Wilson said. "Seek people who push you to constantly keep growing and evolving."

Find a great attorney

Even the most diligent business owners might find themselves on the receiving end of a lawsuit, which can wreak havoc on their finances and their reputation. Trying to find a lawyer during this time can add to an already-stressful situation, so it's best to be prepared by building a relationship with a trusted legal adviser — before you actually need one.

 

Ryan Blair, CEO and co-founder of ViSalus and international best-selling author of "Nothing to Lose, Everything to Gain: How I Went From Gang Member to Multimillionaire Entrepreneur" (Portfolio, 2013), learned this lesson as he suffered through lawsuits with his business. He advised all entrepreneurs to find room in their budget to invest in the best lawyer they can afford.

 

"You can never, ever hire too good of a lawyer," Blair told Business News Daily. "If you need a litigator, you hire the best litigator. If you need a securities attorney, you hire the best securities attorney. You'll never look back at your life, saying you hired too powerful or too good an attorney. You'll only wish you'd hired that attorney sooner."

Create a "rainy day" fund

You might have an emergency savings account for your personal funds, but do you have one for your business? Financial hardships are fairly common among small businesses, especially when they're just starting out, so as soon as it's feasible for you, start setting some of your income aside to cover any unexpected expenses or a dip in sales.

 

"It is always a good idea to have enough financial capital to sustain yourself during … slow months or unexpected emergencies," said Roger Murphy, president and CEO of Murphy Business & Financial Corp. "You'd be surprised at how many tough times can pop up if you're not prepared."

Know yourself well

Ancient Greek philosophers spawned the now-famous adage, "Know thyself," and it still holds true today, especially in the world of business. Wilson noted that entrepreneurs need to know how to self-reflect and understand their strengths, weaknesses, motivations and behaviors. Introspection helped Wilson through recent personal losses, financial troubles and startup woes, he said, and he believes it will be key to helping him deal with any hardships ahead.  "The real answer to dealing with any hardship [has] to come from within,” Wilson said. “Understand yourself … and then explore within to find any ‘blind spots’ that [may be] affecting your reality and your outcomes. Once you start getting in touch with this more, you can be aware of how you personally need to handle hardships, and [be prepared] to deal with these in a more empowering way."

Learn to compartmentalize

In the midst of a personal or business crisis, many entrepreneurs let their emotions spill over from one side to the other. Blair said this "emotional attachment" to certain issues doesn't do you any favors — instead, you need to practice isolating each problem and dealing with it head-on, one at a time.

 

"Emotionally attached … people blow up their businesses when their marriages fail, or they quit working when things don't go their way," Blair said. "The only way to survive the constant battle tests is to compartmentalize your life, and adopt an 'at war' mind-set. [This] means that you don't waste time dwelling on the 'why' and 'how.' You have to fight. If you're unable to isolate issues, or you spend all your energy fighting with the wrong mind-set, then you might not have a business for very long."

Surviving hardship

If you're in the middle of a difficult financial or personal situation right now, it can be a struggle just to get out of bed in the morning, let alone keep your business running. Our sources shared their best advice for persevering and making it through. 

 

Keep pushing forward. "No matter how crazy you may seem to some or how many people tell you 'no,' or how little support you may have both emotionally and financially, you have to keep pushing forward. If you are truly passionate about what you are doing, then none of the negatives will be able to have any major effect on you." – Erik Wilson

 

Look for the silver lining. "Stay positive through the hard times. Every business owner will face countless challenges, and those challenges may very well be what changes you and your business for the better in the long run." – Roger Murphy     

 

Believe in yourself above all else. "You can rely on a great team, family or whoever else you look to as a support network, but at the end of the day, you have to be the responsible party and the decision maker. Tough decisions are never easy and rarely popular. Believing in yourself will help pull you through until you turn things around." – Bill Redfern

 

Draw strength from what weakens you. "When you experience pain, your tolerance goes up, and you only learn survival skills by surviving. In other words, suffering is the greatest teacher. So, get comfortable with your failures and crises. Adversity is not only inevitable, but necessary. Don't be afraid to hit bottom, because this is the strongest foundation to build an empire on." – Ryan Blair

5 Questions with Indy business consultant Tom Feick

Indy Star | February 2016 | Amy Lynch, Star correspondent

 

Tom Feick grew up in a family of entrepreneurs with the hope of one day joining their ranks as business owner himself. Not only has he achieved that dream, he’s helping others to do so, too.

 

For Feick, opening Indiana’s first Murphy Business and Financial Corp. office in 2015 involved a career shift from the accounting, administration and operations management experience he’d accumulated over 35 years. Fortunately, Feick found his skills transferable to his new role as a franchisee.

 

“I worked in the medical device industry in the executive management level,” he said.

 

“When I was ready to invest in a business of my own, I was looking for an opportunity where I could leverage my professional background.”

 

One of the largest and most successful brokerage and consulting firms in North America, Murphy Business and Financial caught Feick’s eye. The local operation now helps support other entrepreneurs throughout the Indianapolis region with business sales, purchases, valuations, and mergers and acquisitions.

 

“The (Murphy’s) national team center is a great asset, because it provides access to both their national business listing system and their network of professionals who are well-­‐ versed in brokerage, M&A, business valuations and M&E appraisals,” Feick said. “As a franchisee, it’s valuable to have access to such a large network of brokers and valuations specialists available to you.”

 

What Feick enjoys most, though, is helping his clients succeed.

 

“I see my role as an advocate for both seasoned business owners and aspiring entrepreneurs,” he said. “I’m proud of the close connections I’ve made with the Indianapolis business community. I have clients I keep in touch with who update me on how their businesses are running since working with me, and it’s a wonderful thing to hear about.”

 

Here’s how Feick answered our five questions:

 

Question: What’s something people would be surprised to know about Indy’s entrepreneurial/startup community?

 

A: “The Indianapolis community is one of the most passionate around. I’ve met with countless entrepreneurial clients in various stages of their company’s lifecycle — startups to very mature and established businesses. One of the most common traits of these business owners I’ve noticed is their enthusiasm and commitment to their businesses and to Central Indiana.”

 

Q: What’s been the most surprising thing you’ve learned in your career?

 

A: “I’ve noticed over the years that there may be shortcuts to many things, but I’ve learned you will very seldom find shortcuts to success. Meeting with my clients and seeing the hard work they put in to make their dreams a reality has emphasized this even more for me.”

 

Q: Do you have a personal business philosophy you try to follow?

 

A: “My personal business philosophy is two-­‐fold. First, truly listen to all parties involved in a transaction and fully understand the expectations of each side. From there, I make sure all parties are treated professionally and that everyone walks away completely satisfied with the end results. In other words, the outcome should be a win-­‐win for everyone.”

 

Q: What does leadership mean to you?

 

A: “A leader to me is someone who, through example, has the highest standards of ethics, morals and integrity. Also, a leader should be able to inspire and lead others with confidence, decisiveness and optimism, and most importantly, have an ample dose of humility.”

 

Q: What’s the best piece of career advice you’ve ever received?

 

A: “The best advice comes from my dad, who says it’s important to choose a vocation you enjoy. If you don’t get up every morning looking forward to your day, you’re in the wrong business.”

 

More about Tom Feick

 

Job title: Principal/Managing Director, Murphy Business and Financial of Indianapolis. Education: IUPUI – Finance.

 

Prior employment: CFO of Esaote North America. Family: Wife, Carol; five children; one granddaughter.

 

Favorite pastimes: Running, walking, reading. And an occasional cigar. Favorite musical artists: “Any artist who sounds good.”

 

Favorite quote: “The future starts today, not tomorrow.” — John Paul II

It Takes More Than Just An Average Joe to Be a Serial Entrepreneur

Entrepreneur | January 2016

 

Early in his career, New Jersey- and Pennsylvania-based Joe Chiarello held managerial positions with the franchise companies Rita's Water Ice and Manhattan Bagel. Then, at the relatively young age of 24, he purchased one of the latter organization's franchises. That was quickly followed by his acquisition of three Rita's Water Ice locations, where he was able to increase sales and reduce turnover by 100 percent.

 

But Chiarello wasn't done yet. He sold the four locations he had and acquired two existing Peace A Pizza and four Philly Pretzel Factory stores.

 

He eventually bought and sold 16 businesses along the way. Clearly deserving of the title "serial entrepreneur," Chiarello saw what he calls bad deals, business-partner betrayals and delays in those years. His most recent acquisition? Murphy Business & Financial Corporation, whose business-brokerage services he'd personally used to sell his Philly Pretzel stores. Today, he's added another line to his resume: business broker, a job he performs with relish around his stomping grounds of Bucks County and Cherry Hill.

 

Name: Joe Chiarello

 

Franchise owned: Murphy Business & Financial Corporation, in Cherry Hill, NJ, and Newton, PA

 

How long have you owned a franchise?

 

I began franchising 15 years ago. As for franchising with Murphy Business & Financial Corporation, it has been three years.

 

Why franchising?

 

By franchising with Murphy Business & Financial Corp., I can go to work everyday and do what I am best at: work directly with my clients and provide business brokerage services. Murphy Business’ corporate team is instrumental in my success, as they do all the back-end work needed to run my business. Instead of hiring someone to do this work, I have a business partner through Murphy Business that handles this on my behalf.

 

What were you doing before you became a franchise owner?

 

At a young age, I held managerial positions for Rita’s Water Ice and Manhattan Bagel, where I gained experience in operations, management, hiring and sales. By the time I was 24 years old, I opened my first business in the restaurant industry. From there, I eventually went on to buy and sell over 16 businesses in the restaurant and retail industries. I especially enjoyed turning these businesses around and making them more profitable.

 

Why did you choose this particular franchise?

 

I sold one of my Philly Pretzel Factory businesses with the help of Murphy Business & Financial Corporation. I worked with regional developer of New Jersey Russ Miller through the transaction and began talking to him about opening a Murphy Business office of my own. He became a trusted resource and he was always happy to help answer any questions I had.

 

How much would you estimate you spent before you were officially open for business?

 

Approximately $60,000. [The first] $35,000 was for the franchise fee; $15,000 was for my initial marketing package (website and direct mail campaign, followed by telemarketing, marketing brochures, etc.) and about $10,000 for office equipment, a computer, etc.

 

Where did you get most of your advice/do most of your research?

 

Without a doubt, the Murphy Business & Financial Corp. franchisees were a valuable resource. I made sure to call as many as I could. Whether they worked with Murphy Business for one year or 10 years, I wanted to hear everything about their experience. Additionally, because I worked with Russ Miller in the past, I directed many of my questions to him.

 

What were the most unexpected challenges of opening your franchise?

 

There were two challenges that I experienced when I opened: finding the right people to hire and controlling growth. With hiring, it wasn’t easy to find aggressive brokers with the determination I was looking for. As for controlling growth, when any business grows too fast, it runs the risk of sacrificing quality. I wanted every client to have the attention he or she deserved, so I was not willing to grow without ensuring they were taken care of at all times.

 

What advice do you have for individuals who want to own their own franchise?

 

Do your due diligence and make sure you are investing in an industry that is right for you. Also, when you find the franchise that interests you, be sure you are talking to as many of its franchisees as you can. If they like (or don't like) something about the franchise’s processes and systems, find out why and make your own analysis.

 

I would also recommend always having working capital just in case there are a few small failures and/or bumps in the road (there always are). Surprisingly enough, many people don't do this and end up unprepared when hard times come along.

 

What’s next for you and your business?

 

Right now, my energy is dedicated to building my team and expanding my service territories beyond Cherry Hill and Newtown. At the same time, I am always tempted to try other business ventures because I enjoy a good challenge, especially one that can help diversify my portfolio.

 

IFA Insider – Franchise Features

IFA Insider | January 2016

FRANCHISEE FEATURE: JOE CHIARELLO

"I love franchising because it allows me to strike the perfect balance between operating my own independent business and still getting ongoing recognition of a well-­‐known brand." -­ Joe Chiarello,

Murphy Business & Financial Corp.

#FranchiseeFriday