Summary

This well established franchised store is situated in a busy shopping mall in one of South Africa's best known holiday and retirement destinations.The business specializes in supplying the Hotel,Guest House,Retirement Villages,Restaurant and Bar industry of quality Glassware-Crockery- Cutlery-Kitchen Smalls-Equipment-Plastic Ware-Bar Accessories and Uniforms etc.

1. History Background

Fully describe the business's activities?

The business specializes in the supply of Kitchen and Tableware products to the food and hospitality industry.Products include Glassware-Crockery-Cutlery-Kitchen Smalls-Equipment-Plastic Ware-Bar Accessories and Uniforms.The Franchise Group is the sole distributor for the following international brands-Libbey Glass,Crisa Glass,Crisal Glass,Royal Leerdam and Fuchs Knifes etc.Other brands include Anvil, Hamilton Beach,Continental China,Carlisle and FNG.

How long has the business been established?

The Franchiser is 14 years in business.This business is established for 7 years.

How long has the owner had the business?

The current owner owns this business for 3 years.

2. Present Market

How does the business operate on a daily basis?

Walk- in customers at the well located retail outlet are 20-30% of total business turnover,the balance of sales are from long standing clients in the food and hospitality industry.Clients include CTFM Group,Arabella Hotel and Golf Estate,Caledon Casino and most Hotels,Restaurants and Pubs in the Overberg Region.

How are the clients attracted to the business?

The business is well-known in the food and hospitality industry.The owner visits new establishments and send catalogues and promotional leaflets to potential new clients.

What Advertising/Marketing is carried out?

The franchiser does regular advertising and marketing campaigns on a national level.(1.5% marketing royalty on turnover)Central website.

Does the business have any contract work?

No contract work.

What competition exists?

There are no immediate competition in the area.

What are the seasonal trends?

The business activities do peak during the summer holiday period.

3. Financial

Is the business VAT Registered?

Yes the business is VAT Registered.

What VAT documentation is on file?

All VAT documentation are up-to-date and available.

Are there up-to-date Management Accounts available?

Yes up-to-date Management Accounts are available.

What Balance Sheet and Income Statements are available?

Financial Statements for 31 March 2011 are available.

What percentage of the business is cash/credit?

60-70% Cash. 30% Credit.

What is the age analysis of the debtors book?

Average monthly outstanding Debtors R80,000, 70% Current, 25% 30 Days, 5% 60 Days+

How could the profitability of the business be improved?

The profiitability can be improved by appointing a full time representative,by increasing stock levels and increase sales by more promotions and advertising.

Is Seller finance available and for what amount?

No Seller finance is available.

What is the payback period?

The Payback period is 31 months.

What is the ROI?

Return On Investment 38%.

4. Staffing

What is the total staff complement?

2 x Staff Members plus owner.

Give a breakdown of staff/functions/length of service?

1 x Staff Member(Stock and in shop sales), 1 x Staff Member(Admin and in shop sales), Total salary expense R7500 pm.

Do any receive special perks or incentives?

2.5% Commission on in shop sales.

Are they on contract?

Yes both are on contract.

Do any have management potential?

Yes,the admin lady do have management potential.

How involved is the Owner in running the business?

The Owner is full time involved in running the business.

5. Premises

When does the current lease end?

The current lease end April 2014.

Is there an option of renewal & what period?

Yes for another 5 years.

What is the annual escalation %?

To be negotiated with landlord.

What are the trading hours?

Mon-Fri 08H30-17h00, Sat 09h00-13h00

What is the square meters of the business?

95 SQM.

Is a copy of the lease available?

Yes a copy of the lease is available.

Do you require a licence?

No special licence is required.

What lease deposit and/or other surety is required?

2 x Monthly Rent.

6. Assets

Is a full asset list on file?

Yes full asset list is available.

Are any items not included in the sale?

All assets are included in the sale.

What is their overall condition?

All assets are in a good condition.

Do any require repairing?

No repairing is needed.

How have they been valued ?

Assets are valued by the owner.

Which assets are on lease/HP and with whom?

N/A

What are their settlement amounts?

N/A

Will Seller settle or Buyer to take over?

N/A

Are copies of agreements available?

N/A

Are they presently insured?

All assets are insured.

7. S.W.O.T. Analysis

Strengths?

The business is in a town well-known for excellent hotels,guest houses, restaurants,pubs and retirement villages.The surrounding towns and holiday destinations are also known for the food and hospitality industry.The central depot and international airport is +- 1.5 hours away for speedy deliveries.

Weaknesses?

No obvious weaknesses are known.

Opportunities?

To increase stock levels and expand the product range.

Threats?

No obvious threats are known.

8. Reason For Sale

What is the reason for the sale?

The owner is going to join his brother in a farming operation.

9. Conclusion

Why is this a good business?

The franchise shop is known for excellent quality and service with lots of potential to expand operations.

What is the price plus stock and the net profit?

Price R440,000,Stock R150,000,Total R590,000. Average Profit R18,700 pm.