Selling a Baskin Robbins restaurant presents unique challenges, such as ensuring all requirements established in your franchise agreement are fulfilled. This guide for Baskin Robbins franchisors discusses the valuation process and how to sell a Baskin Robbins franchise restaurant, along with insights into how a business broker can help.
About The Baskin Robbins Franchise
Baskin Robbins is famous for its specialty snacks such as ice cream, cookies, etc. They also have a well-respected food menu as well. Due to the established name and successful business model, Baskin Robbins franchisors often receive better valuations than restaurant owners not affiliated with a franchise. There are approximately 2,430 Baskin Robbins restaurants across the United States.
A Market-Based Approach to Determine The Value of Your Baskin Robbins Restaurant
There are different types of valuation methods, including asset-based, market-based, and income based. For exit strategies, business brokers typically recommend a market-based approach. This involves the use of your SDE (and other financial metrics) along with rule of thumb data, which are calculated averages based on recent sales for Baskin Robbins restaurants. This data includes:
- Baskin Robbins restaurants sold between 2.20 and 2.90 times the Seller’s Discretionary Earnings (SDE)
- Baskin Robbins restaurants sold between 2.76 and 5.94 times the Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA)
- Baskin Robbins restaurants sold for approximately 0.43 times the annual net sales
Your broker also considers your location, growth potential, reputation (i.e. online reviews), unique advantage, and reason for selling, among other factors that may positively or negatively impact the amount potential buyers are willing to offer.
The Sales Process for Baskin Robbins Franchisors
Selling a Baskin Robbins restaurant (or any restaurant associated with a franchise) is far different that non-franchise business sales. This is because the franchisee must be notified and partially involved in the sale and approval process. Although you should discuss the specifics of your sale with a business broker, here are the most common steps you should prepare for when selling your Baskin Robbins restaurant:
- Notify Baskin Robbins of your intent to sell
- Seek a Buyer With The Help of Your Business Broker
- Receive Sale Approval From Baskin Robbins
- Provide an Opportunity for The Buyer to Review Your Restaurant (Due Diligence)
- Transfer Ownership of Your Restaurant to The Buyer
- Sign The Purchase Agreement and Receive the Payment
By breaking down the process into stages (as we do below) you can reduce the amount of stress and ambiguity during your sales journey. Below is a closer look at each step.
#1: Notify Baskin Robbins of Your Intent to Sell
You should first read your purchase agreement. There may be certain stipulations regarding the sale of your restaurant. To be clear, Baskin Robbins franchises are allowed to sell, but they may first need approval from Baskin Robbins. Once they provide consent, then you (and your business broker) can proceed with selling.
#2: Seek a Buyer With The Help of Your Business Broker
Before you sell, you should receive a professional, market-based valuation to determine your restaurant’s worth. You should prepare all documents you need for the sale, such as your tax returns, franchise agreement, etc.
Once you are fully prepared, you can proceed with finding a buyer that you and the Baskin Robbins franchise approve. The goals are to sell in a confidential manner, maximize your sale price, and fulfill the non-financial goals you have for your exit. Of course, your broker will conduct much of the search for a buyer, leveraging their private access to databases, networks, etc., and their industry connections to find prospective buyers who are willing to pay fair market value.
#3: Receive Sale Approval From Baskin Robbins
Once you secure a buyer who signs a letter of intent (LOI), you will need final approval from Baskin Robbins. They may review the proposed terms of the purchase agreement and approve (or deny) the request to sell to this particular buyer. If you work with a business broker, they can make sure that the selected buyer will receive approval to purchase the company through an internal screening process.
#4: Provide an Opportunity for The Buyer to Review Your Restaurant (Due Diligence)
Due diligence is the stage after the LOI is signed and before officially signing the purchase agreement and transferring ownership. In an ideal case, this process moves quickly. To ensure a speedy due diligence process, the seller should have the documents ready for review. They should also implement a due diligence map to ensure the process remains structured and organized.
#5: Transfer Ownership of Your Restaurant to The Buyer
After due diligence, the seller will officially transfer ownership of the restaurant to the buyer. Baskin Robbins needs to receive the updated ownership information as well. Your attorney and broker can assist you with this process.
#6: Sign The Purchase Agreement and Receive Payment
In some cases, the purchase agreement (closing) may come before the transfer of ownership. During closing, the attorneys for both parties review the purchase agreement and the payment is sent to the seller.
Contact Our Business Brokerage to Discuss Your Exit Strategy
Sigma Mergers takes pride in helping business owners sell their businesses for maximum value. If you are considering selling your Baskin Robbins franchise restaurant, feel free to schedule a consultation with us today.
Scot Cockroft is the Owner & President of the #1 ranked Business Brokerage, Business sales and M&A firm in Texas. Scot has been named Named Deal Maker of the Year by Dallas Business Journal.
He is committed to a “different” type of business brokerage firm, one that is NOT about a sales pitch but, rather, results! In short, a business brokerage firm that is committed to performance-based compensation. Scot believes in these principles as well as a candid honesty with clients. His candid style often takes buyers and sellers by surprise, but is often what assures successful connections between the two.
Feel free to reach out!