It has come to my attention over the last 17 years of being in this industry that most salon owners don’t know whether they own a “Sweaty Betty” salon that is worth nothing or a Super Salon that is worth stacks. Everyday salon owners come to me and ask me to give them an appraisal on how much their salon is worth and whether they can get a good price for it. I always run them through the same questions to arrive at a figure. Here’s how it goes … Where is your salon located? – Shopping Centre, Strip Shop or Stand Alone? Location is key to success in business and all these sites will work, as long as the lease is long, and the rent is affordable. How much rent do you pay? – your rent is the other driving factor in success, your aim is to have the cheapest rent for the best location. Shopping centre rents normally come in at $800 – $1600 per square metre – so if you have 100 square metre shop then you would pay $80,000 – $160,000 per year in rent … obviously if you are paying the higher amount you would want the “Walk By” traffic to be extremely high. We find high rent in a poor location is one of the determining factors that contributes to the creation of a “Sweaty Betty” salon. What lease terms do you have? – If you don’t have a good lease then you have nothing to sell. If you have a 5x5x5 year term (15years) then that is definitely better than having only 2 years left on your lease with no option to renew. Profit vs Turnover? – Selling salons is all about profit and has nothing to do with turnover (sales), profit is how much is left over after you pay all of your bills, and pay yourself a regular wage for your work … how much you have left always impacts on the price you will be able to sell for … the higher the profit, the more money you get when you come to sell! The lower the profit – the less your business is worth. Staff? – If I were to buy your business and the top 2 key staff members walked out on me would your business continue to operate at the same profit levels, or would your staff drag out half your clientele, set up down the road and ruin me as the new owner? If you know that the business would continue on, without a “bump” in the road, then you have a Super Salon. Staff are another important factor in selling a salon, and you need as many as possible to make for a stable business for a new owner. Computer or not? – Being computerised is always part of a Super Salon, as it holds all the data that can be accessed by the new owner, to help to market the business and hold onto the clients. The brand of system does not matter, as these days they pretty much do all the same stuff … get a system that is easy to understand and does not cost you the earth. If you go through each question above and see how your salon “stacks-up” then you can easily find out what you need to do to turn your salon from a “Sweaty Betty” into a Super Salon.   Iain Horne Salon Specialist Business Broker

Two Senior Business Brokers from Benchmark Business & Commercial Sales have been selected as finalists in the 'Business Broker of the Year' category of the 2015 REIQ Awards for Excellence with winners to be announced at a gala event in February. They’re being recognised not only for their exceptional achievements but also for their commitment to integrity in the profession. For 2015 Ian Salter and Lincoln Bridge have been selected as finalists in the prestigious awards process. Ian Salter is a senior broker with Benchmark who has over 8 years experience as a Business Broker. Ian specialises in the sale of franchised businesses – and he heads up a division within Benchmark “Franchise Sales Australia”. Ian Salter has consistently exceeded sales targets over the years, and he is honoured to be a finalist in the awards for the third year in a row. Lincoln Bridge specialises in the sale of childcare centres across Australia. He is also a team leader within the organisation and he has set new records as Benchmark's highest performing broker. Lincoln is honoured to have been nominated and selected as a finalist for the award for the first time. The winner of the award will automatically progress into the 2015 National Awards for Excellence in Perth next year. We wish both Ian and Lincoln the best of luck! The team at Benchmark Business & Commercial Sales

Here are some of the most frequently asked questions about franchising. 1. What is a Franchise? A franchise is a business that operates under a system. It involves one party (the Franchisor) granting another party (the franchisee) the right to operate a “replicated” business, – usually under a recognised registered name, and to use established management methods, marketing systems, and operating procedures. In return the franchisee commits to paying the franchisor an initial fee, and further ongoing fees (royalties). The Franchisee also agrees to comply with franchise systems, policies and procedures. 2. What is a Franchisor? The person or company who owns the operating systems, trademarks, and procedures. 3. What is a Franchisee? The person or company which pays the Franchisor for the right to use the systems, products and processes which are owned by the Franchisor. 4. What are Royalties? Royalties are paid for the continuous use of a piece of work, such as the payments made to an author for a book that is on the market. These expenses are in addition to any one time initial fees. The payments are usually lower than upfront fees since they are a continuous regular expense. With regard to franchise royalty payments, the franchisee earns daily sales as their main source of revenue. The regular monthly income that the Franchisor earns is based on royalty payments from each franchisee. 5. What is a Franchise agreement? The franchise agreement is the cornerstone document of the Franchisee–Franchisor relationship. It is this document that is legally binding on both parties, laying out the rights and obligations of each party. For an agreement to comply under the code it must contain four elements: • an agreement between the parties, which may be written, oral or implied • substantial or material association with a trademark, advertising or commercial symbol • a grant by the Franchisor to the franchisee of the right to carry on the business • agreement by the franchisee to pay the Franchisor, or an associate, an amount in return for the grant of these rights and usages. 6. What is a Disclosure Document? A “Disclosure Document” is the document (or documents) which provide detailed information about a franchise and the Franchisor. Disclosure Documents are required to be given by the Franchisor to potential and existing franchisees, at various points in the Franchisor/Franchisee relationship. 7. What is the “Franchising Code of Conduct”? The code has the force of law and requires Franchisors to disclose specific information about a franchise to both potential and existing franchisees. It regulates the dealings between both parties in a franchise relationship and provides for dispute resolution mechanisms. For a copy see http://www.accc.gov.au/business/industry-codes/franchising-code-of-conduct 8. Do I have to get professional advice before entering into a franchise agreement? Yes. It is important to get professional legal and financial advice before you enter into a franchise agreement. Acquiring or selling a franchised business is a significant decision and often involves a significant financial decision and commitment, so having good independent advice is highly recommended. When acquiring a franchised business, you will need to provide the Franchisor with a statement saying that you have sought advice from a legal adviser, business adviser and/or accountant. If you choose not to seek this advice, you will have to provide your Franchisor with a statement saying that you have been told you should seek advice, but you elected not to do so. These documents must be provided to the Franchisor before entering into any franchise agreement. 9. Is there any restriction on who I can sell my franchise to? The Franchisor is able to determine who is a suitable operator of the business. When selling a franchised business, it is necessary for the franchisee to request the franchisor’s consent for a transfer of the franchise. This must be done in writing. If the Franchisor does not respond within 42 days, consent is taken as having been granted. The Franchisor cannot unreasonably withhold consent. Often there are conditions attached to your transfer. Such as a “transfer or assignment fee” Ian Salter Specialist Franchise Business Broker Benchmark Business Sales & Valuations

5th November 2014 Tu Nguyen has proven himself to be the most valuable part of our sale. Throughout all the trials and tribulations of selling a business, Tu was there for us – day and night, weekdays and weekends. With our sale, Tu proved himself to be the ultimate problem solver. We never felt that Tu gave up on our sale and persisted until he found the right buyer for the right price. He never let any issues drag out and found solutions beneficial to our sale. If you are serious about selling your business then we would recommend Tu’s services. Overall, he has been excellent. K. Canniffe and R. Lee Red Rooster  

Benchmark is honoured to win the 2014 'AIBB Bizstats Agency Of the Year Award'. This award is based purely on performance as measured by settled sales recorded on  BIZSTATS, the AIBB's database of completed Business Sales. Bruce Coudrey accepted the award at the 2014 National Conference, held in Perth, Western Australia during October.

If business owner wants to maximize the price he or she receive then we strongly believe they should trust the process to an experienced specialist business broker and focus on what they do best – running the business.   There are 5 good reasons to use a broker:  

• CONFIDENTIALITY

Many business owners are concerned that their suppliers, customers and staff are not aware that the business is on the market until an unconditional sale has been arranged. The business broker can obtain confidentially undertakings, qualify the potential purchaser and eliminate ‘tyre-kickers’ before identifying the business.

• MARKETING

The more genuine potential business buyers that the opportunity can be exposed to then the more chance of attracting the premium buyer. Our company has a multi-pronged marketing strategy using print advertising, major internet sites and powerful direct mail programs. We also have a huge database of potential investors who have signed confidentiality deeds and understand the sales process.

• VALUATION

Pricing the business right is so important. Research shows that the ‘over priced’ business often becomes ‘shop-soiled’ and sell for less when subsequently reduced than it could have. Experienced business brokers have access to extensive market data and do not rely solely on academic calculations. They also have the business ‘savvy’ to recognize the value in the intangibles and the benefits that will appeal to a buyer. The business broker can suggest a price range that will allow for the premium buyer and be credible and defensible.

• EXPERIENCE

The specialist business broker will have a strong team working to achieve the business owner’s goals and objections, extensive networks with professional advisors and proven negotiating skills.

• BEST OF ALL

If you are dealing with BENCHMARK you are guaranteed that there will be no commission fee payable, unless we sell your business on terms and conditions acceptable to you – (A Focus Marketing Programme is recommended to all buyers, and can be paid on Settlement or at the time of Listing) and we believe our fees are very completive of the specialist business brokers working within the Company. Bruce Rylance. 0418 396910            

Congratulations John Kasapi our 'Salon Specialist'. John was awarded as a finalist for the 2014 AIBB 'Rookie of the Year' Award' at the national AIBB conference over the last weekend in Perth. John was recognised for his methods in prospecting, personal development and contribution to Benchmark Business & Commercial Sales as a Business Broker. John more than 13 years of experience working in the hair and beauty industry – so he really knows and understands the industry and the marketplace much better than most. John really prides himself on offering his clients exceptional customer service, combined with his wealth of sales and industry knowledge. He has “been there and done that”, as he has owned his own business, and he has worked in many top salons around the world – and has experienced everything this industry has to offer. We hope to see John competing for the 'Senior Business Broker of the Year Award' in years to come.  

For the second Year in succession, Ian Salter was awarded as a finalist for the 'Business Broker of the Year Award' on Saturday 25th October 2014 in Perth at the annual national AIBB Conference. The AIBB 'Business Broker of the Year Award' recognises Business Brokers for their outstanding customer service, ongoing development and training, and contribution to the "Business Brokering" Industry. Ian Salter is a senior broker who has over 8 years with Benchmark. Ian is a specialist working in the sale of franchised businesses – and he heads up a team of three in that area – under the banner “Franchise Sales Australia”. Ian Salter has been a consistently high achiever as a business broker, and he is honoured to have been awarded as a finalist for the second year in a row.

Did you know there can be up to 14 people involved in the sale or purchase of a franchised business.  1. That’s a lot of different parties involved in one transaction. Let’s take a look at this now and break it down…

1. The Franchisee (Seller)-it maybe one person, or a couple, or a few people but let’s say for this exercise it’s one.

– The Seller’s Solicitor – will be engaged to assess the contract of business sale and guide the Seller through the process up until Settlement where the solicitor will finalise the sale and exchange cheques etc.  Must assist the seller with disclosure and compliance too. – The Seller’s Accountant – will be engaged to clarify financial data for the Buyer/Purchaser in a formal Due Diligence process.

2. The Buyer / Purchaser could also be one person, or more, again for the sake of this exercise lets’ say it’s one. The buyer has a process to be adhered to before they can purchase a franchise business, there are so many issues to complete for various bodies such as;

-Their Solicitor – has a pretty big job here, they have to review all the agreements, such as; franchise agreement, lease agreement, tripartite agreement, phone system contracts and more as well as keep an eye on the contract timeline to make sure all conditions are satisfied in a timely manner to avoid requesting extensions at the expense of their client. -Their Accountant – is usually engaged right at the beginning of the investigations, mainly to assess financial information supplied by a broker or vendor and then advising their client weather to proceed or not. After the buyer is formally under contract the Accountant will then be engaged to complete part of the Due Diligence, mainly the verification of the financial history.  – but also disclosure confirmation. -Their Financier – will also be engaged early in the process as most Franchisors demand a bank pre-approval letter with their formal application, and they like to know early that the Buyer will be successful with their financial requirements to complete the sale as well as having substantial working capital to operate the business after the sale has settled.

3. The Franchisor – Usually has an in-house process of their own as well as being governed by the legal boundaries of the “Franchising Code of Conduct” which is regulated by the ACCC. The franchisor (after the application and approval process is completed) legally have 42 days to consent in writing if the Buyer application is approved or denied. If approved, the Franchisor then prepares and issues Disclosure Documents to the Buyer’s solicitor, outline training requirements, agreements as well as legal information required to allow for supplier accounts to be opened.

-Their sales/assessment team – they will handle the application and approval process – Their Finance team – will assess assets and liabilities and how financially secure the Buyer will be before and after the deal is completed. – Their Legal Team – they will deal with the Disclosure Documents and everything legal throughout the process.

4. The Landlord – will also be required to assess and approve the Buyer before consenting to the assignment or issue of a new lease agreement. The landlords Solicitor who must approve any lease assignment or sale.
5. The Broker – involved from the start on both sides, firstly listing the business with the Seller and then taking it to the market to source the right buyer for the business. The Broker then works with the Buyer/Purchaser to negotiate a deal. Once there is a contract in place the broker is then seen as the communicator / ”Pivot”, as they are the only person in the sale process that can communicate with all parties; the Seller & the Buyer, and their respective solicitors, accountants and financiers and the franchisor. Franchise sales can take anywhere between 2 to 5 months to settle, this is where we find the Buyer can become battle weary and we (brokers) need to monitor this closely to keep everyone on track.

Let’s go back and count the list – Buyer, Seller, Seller Accountant, Seller Solicitor, Buyer Accountant, Buyer Solicitor, Buyer Financier, The Franchisor, Franchisor Assessment Team, Franchisor Finance Team, Franchisor Legal Team, The Landlord, the Landlords Lawyer and of course, the Broker. Let’s add them up, I make it – Fourteen – That’s a lot of people all waiting to complete a sale, so it’s no wonder that communication between the parties is so important. As Tom Peters said “Communication is everyone’s panacea for everything.”  – Tom Peters. “Honest Communication is built on truth and integrity and upon respect of the one for the other.” – Benjamin E. Mays   Ian Salter Franchise Sales Australia