Vetting buyers properly  to protect confidentiality:

As this is part of our “secret sauce” if you will we felt it was wise to password protect this section as most brokers don’t do this right or even know about it.

So diving back into this topic from the “your most pressing questions” area…we actually deal with so many leads because of our solid marketing efforts, we have a full time vetting department who upon receiving the Non-Disclosure Agreement, personally vets EVERY buyer. In our interview (which can be fairly extensive) we ask them a lot more about what they currently do and make sure they are not a possible competitor or perhaps an employee just ‘fishing’ for data (this actually happens quite often). We don’t know about you, but we sure wouldn’t want our employees to know how much money our company makes and the same goes for my top competitor.

Once we establish that this person IS worthy of our time and yours (and not your competitor or employee), and we know they have likely met the criteria by your franchise to actually buy your location, we then provide detailed information to them (our selling profile). The point is, we do not provide much detail (and certainly not your financials) without extensive vetting.

From this point (after the buyer has signed the NDA and we have vetted them well)  we can only admonish the buyer about not breaching confidentiality, but you’ll notice that even our emails have big bold notices that buyers have received private information and it’s all over our profile documents as well. In short, we do everything reasonably possible to minimize the chances of a confidentiality breach and it rarely EVER happens.

Real world story: We did some research recently where we contacted about 20 brokers on various businesses they were selling and not one broker actually picked up the phone to vet us!  If we did get actually get an NDA (five didn’t even contact us back)  the broker would just have us sign it, then they would just send the entire financial package they have.  In a word…DISTURBING! The point is, we could have been ANYBODY.  By the way we were actually looking for a couple of specific businesses for one of our Principles here at Blue Stone so it wasn’t like we were just “secret shopping”.   Further, you would have thought that there would have been much more professionalism by these other brokers getting back to us or at least calling us as all of these businesses we were looking at were priced over $1,200,000!! 

 THE #1 reason for breaches of confidentiality with franchises :

When/if you connect with your franchise to let them know you’re selling, they might put your location on a list (or post it on their website) and/or literally blast this information out to several franchise selling groups, some of which have over 100 “Franchise Start-Up Sellers” (we’ll call them Franchise Sellers for short) in each group! 99% of all of those Franchise Sellers are NOT RESALE BUSINESS brokers.  Most wouldn’t know the difference from an NDA (non-disclosure agreement) to the NBA.  Their business model is to work with buyers that are looking to do start-up from scratch locations.  The goal for the Franchise Seller is to just send the lead to the franchisor and then let them handle the transaction from there and they collect a commission. The whole selling process now is left up to the franchisor and that Franchise Seller has now moved on to other things hoping the deal will close and they get paid for basically supplying a lead, and nothing more. You should just make sure you are aware of this and that you are okay with it , as most sellers we have represented over the years have never wanted their business listed and blasted out to hundreds of  “Franchise Sellers” with the possibility of a main employee finding out and possibly quitting. As you can imagine, this is clearly a serious issue for your business. In fact, we’ve actually seen this happen to a couple of sellers and it was VERY devastating for their business to the point where it had to be taken off the market for months while the seller found new employees.  By the time the new employees were worked into the business the business had sales and earnings declines which ultimately led to about a $200k reduction in the sale price!

Additionally, you may be interested to know that many times when a franchisor sends out this resale list or posts it to their website, many do admonish these Franchise Sellers, typically in bold, YOU ARE NOT ALLOWED TO ADVERTISE THESE RESALE LISTINGS. However, we see many Franchise Sellers do it anyway and they will literally post the price and location (sometimes even the name or logo) in an ad and try and generate leads so they can collect a referral fee/commission. We have even seen our own listings, where we have had an exclusive with the seller, cannibalized and our data posted! In fact, we’ve seen as many as five (5) listing for the same business all priced either the same or within $1,000 to $500 of each other!!   On many occasions we have had to contact these Franchise Sellers to pull their ads, and worse, we discovered that they were disclosing the brand and location over the phone with NO NDA in place. It’s just the Wild West out there when it comes to franchises as opposed to an independent business, which is why we do our level best to ensure confidentiality and protect your sensitive information.

Are there times when having your details disseminated out to everyone are a good idea? The short answer is…yes. For example, if your business is under-performing or if you’re in an area that for some reason is not generating good lead flow (doesn’t happen to us very often and if it does it’s normally on very low priced businesses), then you need to do everything you can to get leads, but you’ll need to balance that with a possible breach of confidentiality and the likelihood people will be advertising your company willy-nilly without you knowing it.