Industry sector:

Sandwich bar: Buy an existing business


You might decide to buy an existing sandwich bar business rather than start your own from scratch. Buying a going concern can mean that:

  • the premises, fittings and equipment are already in place
  • there are established customers
  • the business can generate income immediately
  • suppliers have been identified and relationships established with them
  • the business has a reputation and track record which can help if you are looking for finance
  • staff are already in place

However, look critically at any business that you are interested in to make sure that the price you negotiate with the seller is a fair one. Try to establish why the business is for sale - for example, is the owner keen to retire or is there another personal reason for selling up.

Your market research into the sector as a whole and the locality in particular will help you to establish whether or not the owner is selling because he or she can no longer generate enough income from the business. This may not deter you - many business people are confident that they can turn a failing business around. The important thing is to have established the current position so that the price you pay for the business is not too high.

Other matters to consider include:

  • the state of the premises, fittings, equipment and so on. Do fixtures and fittings meet current safety and hygiene standards? Will you have to spend money refurbishing or replacing assets? You might decide to carry out a complete refit
  • is the existing owner prepared to give you some training after you take over if this would be beneficial
  • existing staff rights
  • how to retain key personnel once you've taken over
  • does the business owe money that you will be responsible for
  • if you are paying for goodwill, to what extent does this depend on the skills and personality of the seller

Find our as much as you can about the business's reputation. What is its current hygiene rating and has it failed any food hygiene inspections? Are there any actions or enforcement orders still outstanding? Look to see what people are saying about the business on Tripadvisor.

Ask your accountant to look critically at the business accounts for the past three years and discuss with him or her the selling price in the light of what the accounts reveal. Make sure you budget for other professional fees such as legal fees and valuation and survey costs.

Franchises

Franchising can be a good 'halfway house' between starting out from scratch and buying an existing business. If you purchase a franchise you'll still be setting up your own business, but you should benefit from the experience, resources and perhaps the name of a business that is already successful.

There are various different franchises available in the sandwich bar trade. Some are well known national outfits like Subway, while others are more regionally based. An online search for 'sandwich bar franchise' should turn up a range of different opportunities.

Although different franchise schemes vary in detail, most feature the following key points:

  • as a franchise holder, you'll remain self employed but you'll use the identity (corporate colours, logos, trade name and so on) of the franchisor
  • in return, you'll pay the franchisor a fee - this might be a one-off investment, a monthly charge, or a combination of both
  • both you and your franchisor will have to fulfil certain obligations and maintain certain minimum standards

You may have to buy some, most or all of your stock or ingredients from your franchisor.

Many franchisors will provide you with any specialist training you require, help with advertising and marketing, as well as advice and support on a range of business and technical matters.

Details of the above points are set out in the franchise agreement or contract, which both you and your franchisor will sign. The agreement will also deal with other matters, for example any territorial exclusivity due to you and the minimum period for which the franchise will run.

Before entering into a franchise agreement, it's advisable to check the terms carefully to be sure that you're getting a reasonable deal. Go through the contract with your solicitor before signing anything. More information about franchising is available on the Franchise Info website. Information is also available from the British Franchise Association (BFA).