Fully describe the business's activities?
The business is a take away franchise and offers clients fish and chips in a variety of assorted meals. The shop is also well known for the generous portions for affordable prices. The franchiseâs recipe for success allows the owner to offer clients quick food at excellent quality. The layout is optimized for productivity and is easily manageable for any type of owner. This is an great small Franchise that offers an Potential Purchaser an investment and monthly profit margin greater that the commercial banking institutes.
How long has the business been established?
The business was established in October of 2012, and the current owner is the second shop owner for the last 2 years. The previous owner started the Business from Gauteng and was never really involved, therefore he sold to the current owner that resides in town.
How does the business operate on a daily basis?
The business is owner operated, for half a day only. Purchasing of stock, supervises the staff, and ensures that work functions are performed to perfection on a daily basis does not keep the owner busy for the full day and managing of the store with the necessary stock control and systems is very possible. Stock is purchased from the Franchisor to ensure that quality is maintained throughout the outlets. Without Owner operations the danger of "mismanagement" is high and profits are lost in transit, therefore we shall recommend and hands on approach.
How are the clients attracted to the business?
Location, Location in this instant is the key to the success of the Business. The Business location is ideal for walk-in clients, branding and visibility in corporation with the outside seating area on the outskirts of the building, these are the first thing the public sees when entering that parking area. Western lifestyles prefers a "healthyâ eating plan. The fish and chips product is versatile dishes ideal for lunches & supper at affordable prices. In comparison to other fast foods, the vitamin enriched natural product goes well with the publics health ideas and their taste buds, good portions and low prices bring customers to the premises. Serving with side dishes, salads & sauces.
What Advertising/Marketing is carried out?
National Brand Advertising and awareness is created by the Franchisor. Each Franchisee is responsible for a monthly payment of R 689.70 per week to cover these advertising costs. Additional local advertising in the newspapers, flyers and store website advertising methods is done by the Franchisee. The Franchise is located in an centre/mall and as part of the monthly charges an advertising payment that has various marketing strategies currently being implemented such as advertising on the billboards, advertising boards on the outside of the mall and much more.
What competition exists?
Not much competition exists for the Fish and Chips Franchise. There are other take away stores in the near vicinity, but the layout of the mall has taken all aspects into account for one store not to be in competition with the other. The only other competitor in an exact similar market is at a different entrance and will not affect the clientele of this business at all (In other words, on the other side of the Mall).
What are the seasonal trends?
The seasonal trends of the business are as follows: January, February and March are the slowest months, with November and December offering the highest turnovers. From March until November the business is very stable, and even though the turnover is influenced by a seasonal trend, the business can be very stable. Weekends are at the norm more busy, with an decline and or incline depending on the beginning and or end of the month.
Is the business VAT Registered?
No; the Business is not VAT registered. The Owner has neglected to register the Business. It is my recommendation that the Potential Purchaser purchases the Business in his personal capacity and after the transfer place the Business in a Legal Entity that is registered for Vat. Input and output Vat can have an additional profit to the Business.
Are there up-to-date Management Accounts available?
The Business operates on the GAAP system. This IT system ensures that the business monthly sales are recorded including cost of sales. The system is linked with the Franchisor, so they can keep track of the daily happenings in the business. The expenses in the business should be kept low in order to maintain high profits. Management account shall be in the form of the Operating System verifications.
What percentage of the business is cash/credit?
The Business Franchise operates on an average of 85% CASH transactions and 15% CARD transactions. There is no credit offered to any clients.
What is the age analysis of the debtors book?
The Franchise Business does not have a Debtors Book. The Business operates on sales / cash only basis, food perishables is not an item that is given on debt.
How could the profitability of the business be improved?
The profitability of the business can be improved with the following suggestion: 1. Staff should undergo the compulsory training with head office, and with the owner in regard to Client Service and Friendliness. Staff turnover is an aspect that can be managed with long term employment. 2. Owner involvement is a must in any industry in todayâs economical status. Owner involvement insures best and profitable systems and implementations in regard to Stock and Expenses. 3. More attention can be given to detail, from the presentation of food to clients to stock handling and wastage to insure expectable Cost of Sales percentages. Special attention should be given to the Purchase of potatoes which is the main stock necessary of the Franchise Business. 4. Deliveries (With Schooters) to town. There have been numerous requests by other businesses and this is a viable option. 5. Franchisee marketing none exists and the Potential Purchaser should invest in short term marketing mostly in the web. Brand awareness is also a focal point that can be in proofed.
Is Seller finance available and for what amount?
In this instant Seller Finance shall not be available. The Owner is planning to relocate to Gauteng with her family. Please be advised that the Seller Instruction is that we shall only work with a Cash Purchaser. We at Aldes eMalahleni (Witbank) agree with this planning for Business finance with the Commercial Banking Institutes is an aspect that is not viable and or a realistic aspect.
What is the total staff complement?
7 Staff member are employed in this Franchise Business. 3 x Cashiers and Service Attendance 4 x Kitchen Personal There is no manager appointed in the Business, and the personal does their own cleaning and at times stock ordering. The current owner does not do the opening and closing of the shop (At times), and intrust the personal with this task. The current Owner only works half an day at the shop for she has family responsibilities that also needs her attention.
Give a breakdown of staff/ functions/ length of service?
It is recommendable to note that the Current Staff compliment is the same staff that was taken over from the previous owner of the Franchise Business and has remained in the Business in full to date. All staff members has been trained by the Franchise Head Office.
Are they on contract?
All staff members are contracts. Contracts are fixed supplied by HR Head Office to all their Franchisees. Contracts are tried and tested, but this does not mean that you as the Potential Purchaser cannot implement new Employee Contracts, the employee position and salary scale shall stay unchanged as per the Labour Relations Act (LRA), and the Basic Condition of the Employment Act (BCEA).
Do any have management potential?
At the moment the Franchise Business does not have a manager in place and the owner operates the Business on a half day concept herself. I do belief that there is personal that can be appointed as manager and has the necessary skill to operate the Business in full. But it shall be my recommendation to be involved with the Business, hands on approach. Please be advised that with years of experience the lack of Owner involvement opens doors to theft, stock losses, client service levels drop and premises shall be neglected. The bets Purchaser shall be a person and or individuals that reside in the same to as the Business, to insure maximum management and operation.
When does the current lease end?
The current Lease shall end in 2018. The Center / Mall management is very open to discuss a new Lease Agreement with the right tenant. Please be advised that the normal ITC shall be done and that you as the potential tenant shall be interviewed by Center / Mall Management, for approval. The Franchise Group shall also require interviews to approve you as the new Franchisee. It is imperative that you as the New Franchisee be screened to insure that the business is best suited to your and you are suited to the brand.
Is there an option of renewal & what period?
There is an option for Lease renewal in the current Lease agreement. We at Aldes have worked with the Center / Mall management before and know that they would rather start with a New Lease Agreement when a Business is sold and a new owner takes position thereof.
What is the annual escalation %?
The annual escalation is 10%. It is important to understand that the Mall has additional charges over and above the Rent on a Monthly basis. Please be advised that the Expenses has been incorporated into the Income Statement. Electricity, Maintenance on the Air Conditional, Marketing Fund, and Municipality rates, Municipality Refuse, Sanitation, and Water. As part of the Due Dilligence all the expenses in the Business shall be verified.
What are the trading hours?
The trading hours of the Business is in line with the Mall recommended hours of trade. Please be advised that these trading hours are only approximate hours and may diver from time to time depending on the season trend (Inclusive of Holidays) and mall management advertising and promotions. Mondays to Fridays. 09H00 to 18H30 Saturdays. 09H00 to 17H00 Sundays. 09H00 to 15H00
What is the square meters of the business?
74 m2. This is an small shop with an outside bench eating area. Please be advised that the Franchise Business for Sale is an Take Away Business and not a Restaurant.
Is a copy of the lease available?
An Copy of the Lease in available from the Seller and or Center / Mall Management after proof of funds have been established and an viewing and expectance of the Business have been received. In the interim as part of the Due Diligence an copy of the Monthly Rental Invoice with all additional charges are on file with Aldes.
Do you require a licence?
The following Licenses are in place as per governmental acts, policies and regulations. Please be advised that Aldes eMalahleni shall be able to assist with all the necessary transfer of licenses and or reapplying for the license as the case may be. 1. Trade Licenses (Business Licenses) in terms of Regulation 5 of the Licensing of Business Regulation, 1996 made under Section 6 of the Mpumalanga Business Act, 2 of 1996. This license is not transferable and the new owner shall need to reapply for his own licenses. (Ones of Application and Payment with no Renewal Fees annually) 2. Health Licenses (Certificate of Accessibility) in terms of Section 15(1)(n), where applicable, read with section 15(7)(b), of the Foodstuffs, Cosmetics and Disinfectants Act, 1972 (Act No. 54 of 1972). This license is not transferable and the new owner shall need to reapply for his own licenses. (Ones of Application and Payment with no Renewal Fees annually) 3. SAMRO Licenses, as per the âSouthern African Music Rights Organizationâ. (Ones of Application and Payment, and renewable Yearly â this is a much uncontrolled License with no Local Municipal involvement) 4. SAMPRA License, as per the âSouth African Music Performance Rights Associationâ (Ones of Application and Payment, and renewable Yearly â this is a much uncontrolled License with no Local Municipal involvement)
What lease deposit and/or other surety is required?
The new owner shall need to accommodate (financially) for the following expenses: R 23 000 for first month's rent. Approximate R 60 000 to R 80 000 as Rental Deposit (This is an aspect that shall be discussed with the Mall Management) Franchise Joining and Training Fee of R 130 000-00 Excluding VAT. The current Owner has made inquiries with the Franchise Head Office and they have come back with a discounted Franchise Fee of R 85 000-000 Excluding VAT, if the new owner decides to do a revamp on the Store immediately. A Revamp is not a must for this Franchise Business and shall be the prerogative of the Purchaser. If the Potential Purchaser does decide to proceed with the Revamp, the cost of the revamp shall be approximately R 130 000-00 to R 150 000-00. Approximate R 10 000 for the License applications and all the necessary placement of licenses. Please note that this is aspect that shall take time and is not an all ones off expense.
What are the main assets of the business?
The Main Assets of the Business is equipment utilised for the operation of the Business. The Assets value after depreciation is approximately R 300 000-00. A complete Assets List / Register are on file with Aldes, and shall be discussed with a serious Purchaser. Please be advised that this Business is sold as a Going Concern, therefore the Assets, Stock and Goodwill is all inclusive of the Selling Price.
What is their overall condition?
The Condition of the Equipment of the Business is acceptable and in good order, but with time as with all things, maintenance is needed from time to time. The Franchise Business is very clean and neat at all times. The value of the assets has been done and completed by the Seller. I have found the depreciation on the assets fare, the asset list shall be provided to a serious Purchaser viewing.
Which assets are on lease/HP and with whom?
The seller shall insure that all the assets of âTHE BUSINESSâ are the unencumbered property of the Business and are not subject to any cession, lien, lease agreement or Hire Purchase agreements, and that the assets shall bean full list shown by the SELLER to the PURCHASER and will on the EFFECTIVE DATE be in working order.
Are they presently insured?
Insurance is in pace with the Franchise Take Away. The monthly premium is only R 500 as incorporated to the income statements and expense. The lost cost in insurance is part of the Malls securities and the location of the Business. The Seller has assured that the assets of the Business are fully insured against loss or damage by fire and theft. No insurance shall be cancelled prior to the EFFECTIVE DATE without the written consent of the Purchaser.
Strengths: 1. This franchisee has the support of one of the best known brands nationally who facilitates their franchise stores with expertise and great care. The franchise provides all the necessary support and systems to operate the Business successfully. 2. The biggest Mall in Mpumalanga, with great attraction for clients and consumers from all over the country. 3. The business is well situated and easy accessible, coupled with the surrounding businesses ensure a consistent flow of feet to the store. 4. The shop is small enough to be easily managed, but big enough to tend to any amount of clients. 5. Good profit margins trough out the year. 6. Growth and increase of profits can immediately be obtained with controlling management measures. 7. This is a fast track Fish and Chips Franchise that caters for the take away market with sizable portion at an affordable price.
Weaknesses: 1. The long hours of operation of the Shop does tend to keep the owner in the beginning busy to insure staff rotation and client service and stock control. It is recommendable to note that this is the kind of business that an individual can learn and run with utmost ease when you have gotten the info and operation memorized. 2. Cash Business, we can say that this is a weakness, but we can insist that this could become an problem with theft and mismanagement. 3. This is an hands on operation and needs owner involvement, it shall be our recommendation that with an manager the Business turnovers shall not be the same, and on the other hand increase with owner involvement on an daily basis. 4. When looking at this store for sale, I do belief that marketing can be in proofed. And not the marketing in regard to newspapers and bill boards that is an waste of funds, but direct marketing with Guesthouse, Schools and expanding the brand in deliveries.
Opportunities: 1. Attracting children to the Shop shall have a positive long term impact on the Business and profitability. Ice Cream Machine: Sells well in warm weather and shall always be an winner with the kids, this in itself shall also increase additional income. 2. Deliveries are one department of the Business that can be grown over time.
Threats for the Business: 1. Economical Treats in regard to the Food and Restaurant, Take Away Industry (With research done, it is very clear that the industry and also the geographical area is in need of professional individuals that take pride in the stores and products, the family orientated clientele and the fact that you shall not be interacting with the city people but rather the people that want to talk and get to know there Business owner in itself can be a challenge) 2. Personnel turnovers, and retraining of Professional Staff. 3. Owner involvement, this is a Hands-on-Business. The Business shall require your full attention in sales and services. The consumer has become accustomed to services beyond the norm in the market, problem solving is important for the business industry because it has evolved to Service Standards that halters the consumers when the Business does not operate correctly.
What is the reason for the sale?
The Owner is relocating to Gauteng with the future aim to relocate internationally with her family. Please be advised that the Business acquisition shall not be handled as a keys sale. The Business owner shall assist in the Business to the benefit of the Purchaser for a period to be discussed in the sales contract between the Seller and Purchaser. A training period for the Purchaser.
Why is this a good business?
This is a Great opportunity for the individual that wants to invest into the future. The Business is very well located with feet now and for the future. With a Return of Investment of 36 Months when looking at the purchase price in cooperation to the Average Profit Margin over 12 Months then this is an ideal Extra Earnings Potential in comparison to a Banking Institute Investment. A small manageable Business with a Franchise Brand basis for backup and system orientations. Great Profits Margins, low staff management, manageable expenses with a small stock holding to minimize risk. One of the Best Business opportunities currently in this sector.
What is the price plus stock and the net profit?
The Purchase Price is R 900 000-00. Stock included in the Purchase Price is R 25 000-00. With 36 Months Return on Investment this an ideal Business Investment above the Norm of any Commercial Banking Institute. R 900 000-00 Purchase Price R 23 000-00 First Month Rent R 80 000-00 Lease Deposit - Refundable R 130 000-00 Franchise Joining Fee R 10 000-00 Licensing Total Cost of Approximately R 1 150 000-00
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