Transitioning Ownership After Selling Your Restaurant
Making a restaurant sale transition can be overwhelming, especially when selling your own business for the first time. If you need assistance, we’re here to help. We will list everything you need to know to give your company new ownership and make a smooth transition.
Make Sure Everything in the Sale Agreement Is Carried Out
After creating a deal with the new owners and reaching an agreement, thoroughly examine all points to ensure everything is in place. For instance, check the sale price, the terms, contingencies, and other elements to create a clear picture of the transition.
That will help you cover all major factors and receive what you have requested. If you notice a point or new policies not discussed in the negotiations, ensure to run them by your broker.
Transfer Legal Requirements
Selling businesses involves more than just transferring property ownership; it involves complex legal and financial considerations crucial for a smooth transition. Instead, you must pass on legal requirements, such as permits, lease agreements, restaurant licenses, and other essential elements.
Thus, before giving the new owner the keys to your existing restaurant, collect and transfer all documents and legal requirements. Also, ensure all licenses and records are current to avoid legal difficulties and liabilities.
Notify Employees
Your employees must be informed about the change in ownership, a critical step in the legal transition process when selling your restaurant. Sit down with them and address their concerns, advise them on their future careers, and help them during the transition period. As a former owner, notify your trained staff and help them with the new career chapter.
Help them understand what the new business is all about and how the new restaurant will function. You can also introduce them to the new management and create a welcoming atmosphere where they’ll get to know each other better.
Inventory and Asset Transfer
If your agreement states that the previous owners should transfer inventory to the new owners, you must respect the terms and start transitioning. Review the contract and check what you need to leave and what you can carry.
Then, prepare all said items, such as furniture, restaurant equipment, and inventory. Once you do, invite the new owner and review the contracts again to ensure everything is in place.
Settle Finances
One of the essential factors regarding transitioning a business is ensuring the finances are in order. Thus, before you transition, pay all your outstanding bills. Moreover, calculate your cash flow so the new owner can understand the financial possibilities.
Also, it’s important to transition the existing bank accounts and other financial elements, a process detailed in our guide on finance for selling a restaurant. If you find it overwhelming, you can consult financing professionals and enjoy the best experience.
Training and Knowledge Transfer
All restaurants are different, so ensure the new restaurant owner understands how the business works. Walk them through running the business, train them to use the existing restaurant elements, introduce them and the staff to new menu items, etc.
Also, point to imperfections and challenges to help them navigate their experience better. Show them how to write their success story by discussing the basics of running a restaurant business, including online advertising, marketing, generating cash flow, and taking advantage of market trends.
Notify Suppliers and Vendors
After running a restaurant for some time, you have suppliers and vendors you communicate with regularly. Thus, tell them you’ll no longer collaborate because you’re selling your company. You can recommend the new owner continue working with them or give them ideas about their next supply step.
You can also present some of their items to the new owner and help them determine whether they should continue business collaboration with your people. By notifying your partners, you’ll create a seamless transition in the supply chain, and they won’t lose any assets due to your selling process.
Notify Customers
Guest satisfaction is the top priority of every business owner. Thus, tell your customers all about the transition. Tell them whether the restaurant will change its name, what menu items it will serve, and what they can expect from the new company.
This way, your customers will get used to the new service, understand how the restaurant works, and maintain high customer satisfaction. You can accomplish that through social media networks and online advertising to ensure that most customers see the news.
Final Inspection and Handover
After taking all the steps above and ensuring everything is in place, run over the contracts again and be 100% sure the sale will go smoothly. Your final inspection should ensure that everything is ready and you can finally sell your valuable restaurant.
If there’s anything left to do, do it in the first three months of the transition, after which you should give up your space for the new owners. The best part about this selling experience is that it’ll create an excellent opportunity to meet new people and ensure your business is in the right hands. The last step is to give your keys to the buyers.
Ready to Transition Restaurant Ownership?
Establishing and purchasing a restaurant business takes time and effort. If you are selling your business, ensure everything flows smoothly and help the buyer on their new journey. Now that you know what to pay attention to when selling your restaurant, it’s time to follow our tips and make the sale a piece of cake.
FAQ
What is the typical time frame for completing a restaurant purchase in Canada?
Buying a restaurant business may be one of the most complex processes. Many factors may impact the complexity of the process, thus affecting the timeframe. Therefore, giving the new owners their keys may take a while. Usually, it takes anywhere between four weeks and six months.
What are some tips for negotiating the best restaurant price?
Many people will try to lower the price of your business and get the best opportunity. However, if you know how much your restaurant is worth, don’t settle for less. The best advice we can give you is to consult real estate and financing professionals who will help you determine the value and create a negotiation strategy.
Why should I consider selling a restaurant?
Numerous reasons may stand behind the thought of selling your restaurant. For instance, you may want to open another business or move to another city. Before you decide, put all your points on paper and see whether you genuinely wish to sell your restaurant.
What are the benefits of staying to train the buyer?
Staying to train the buyer can have several benefits. It is a great opportunity to set the business up for future success, ensuring a smooth transition, financial implications such as escrow accounts or notes due to the seller, protecting your reputation, helping staff members, and managing risk for lenders and investors.
How should I determine the worth of my business when selling?
It’s important to determine the worth of your business, considering factors such as the selling price of similar businesses, inventory value, and physical assets. Hiring a professional business evaluator can help you accurately assess the market value of your business.
Resources
https://sbs-spe.feddevontario.canada.ca/en/closing-or-selling-your-business
https://www.canada.ca/en/services/business/maintaingrowimprovebusiness/exitingbusiness.html
