In this article we will attempt to illustrate the impact that existing lease and franchise agreements may have on the purchase transaction. Please bear in mind that this is not intended to be an exhaustive list and that it is always advisable for the purchaser of a franchised business to seek professional advice regarding the terms of existing agreements, and their possible impact on the future of the business. By Kobus Oosthuizen Buying an existing business implies buying the assets, both tangible and intangible, in order to continue trading for the purchaser’s gain. However, there are two “assets” that do not form part of the assets of the business, but where an agreement exists between the seller of the business and the owner of such assets for the use thereof, and where the seller of the business would be required to cede or sell his rights thereto to the purchaser. - The business system In the case of a franchise business, the intellectual property applied within the busin

29 August 2012: Women are increasingly holding senior positions in their professions or running their own business. According to the 2010 Women-Owned Businesses in the 21st Century report the number of women-owned businesses in the United States grew by 44% between 1997 and 2007, twice as fast as male-owned firms. Also highlighting female involvement in businesses is the 2010 South Africa GEM report, which noted the gender difference in the established business rate in South Africa is 53% male and 47% female. According to Nazeem Martin, Managing Director of Business Partners Limited, there has recently been a noticeable shift in the number of investments approved and disbursed to female-owned small businesses. “Over the past five years, Business Partners Limited has experienced a steady increase in the number of female clients, and this past financial year 43.3% of the number of investment disbursements were to female-owned businesses, and 36.2% in value. “These increases are enco

The time is now…Flavours of Life Holdings is very proud to announce the launch of a brand new, fresh and exciting food-on-the-go concept! B’eat Fast Foods is defined as tempting, traditional African dishes transformed into delicious and attractively packaged food-on-the-go for everyday people at everyday prices. B’eat offers a space to meet, eat and relax. Our guests enjoy quality food and beverages at affordable prices, served by our friendly staff in a funky environment. Situated in the Heart B’eat of Sunnyside, Pretoria, B’eat brings our guests a true Urban Flavour Revolution! It’s about the Heart B’eat of a nation. It’s about bringing our people together. It’s about food for the soul! Infusing African spices with modern, contemporary cooking is our core rhythm. B’eat harnesses the diverse pulse of the African streets to bring about this Urban Chow Revolution. We bring our guests the taste of homemade stews, tantalizing grilled chicken, succulent beef dishes and the traditiona

The ICC Team recently visited one of their newly opened franchise stores - The ICC Home Lifestyle Brandfort in the Free State. The store, owned and managed by Marina Muller, sells nonfood items and is well located in the main street of Brandfort, in one of the Brandfort’s oldest but most well kept buildings in town. ICC Home Lifestyle Brandfort store opened on the 16th June and has grown from strength to strength in the last seven weeks. The town, with population of only 12 100, has been extremely supportive, with residents still taking the time to congratulate Marina on the success of her lovely store. Marina Muller and her team welcomed the staff from ICC and thanked them for their ongoing support and guidance from inception. Muller comments “ICC have helped me 100% along the way and I would like to thank them and in particular Kevin Barrett for helping us grow and blossom the way we have. Its like one big family to me and I could not have done it without ICC’s expertise

27 August 2012 - When an entrepreneur launches a new business all he or she dreams of is success. However, once this success is achieved and the business is ready to grow further, many business owners just don’t know what to do. This is a common challenge for owners who work in the businesses they have created; often they are too involved in day-to-day events and become frustrated because they know that new opportunities are passing them by. This was noted by the Business Coach on the Standard Bank-sponsored SABC3 series that examines and advises real business owners on the challenges facing small business. According to Clive Pintusewitz, head of Small Enterprise and Enterprise Development at Standard Bank, the real art of being an entrepreneur is knowing when it is the right time is to start thinking about expanding the business. “Even more important is being able to think creatively and identify the correct steps needed to take the business to the next level,” he says.

Taking a look at the particular aspects that should form part of any complete due diligence. By Kobus Oosthuizen In our previous article we established that due diligence is the process of acquiring information to support a business valuation. It is in the process of confirming the numbers and in doing so the probability of achieving future profitability. While this is central to validating the valuation model, there are further elements to the due diligence process that should not be ignored. While the income statement illustrates the movement in equity, i.e. how much money has been made and added to the reserves of the business over a certain period, the balance sheet reflects the actual asset and liability position of the business. Statutory audits, however, are seldom performed on information less than three months old and yet it is exactly this information that is of particular interest when conducting a business valuation. It also means that the financial information

Chapter seven: Investigating the suspects – The Owner By Michael Said In 2009 an inspector from the department of labour arrived at my restaurant “Reel ‘n Rustic” in George. Having been forced to make the arduous journey from all the way across the park he was already aggravated and aggressive as he stepped in the door. “I am here to investigate reports of gross abuse in your labour practices” he said. “We believe you not only mistreat, but grossly underpay your management.” “Oh,” I said “that is very strange because there are only two managers here. One of them works a maximum of 30 hours a week, gets alternate weekends off, earns R15,000 a month excluding benefits like staff meals, medical aid and pension, he gets 21 days sick leave and 18 days paid leave a year. Not to mention that he seldom works beyond 10pm and when he does is entitled to arrive late the next morning.” “And the other manager?” he asked. “Well,” I replied “he is mentally handicapped, works about 90 hours

20 August 2012 - Ultimately, everyone is in business to make money. This means that sales should always be at the top of the agenda. Without sales, the chances of a business succeeding and growing are remote. Strangely enough, it is in the areas of sales and sales management that many small businesses struggle the most, as noted by the Business Coach on the Standard Bank-sponsored SABC3 series that examines and advises real business owners on the challenges facing small business.  He pointed out in a recent episode that winning deals demands good management, and there are many reasons a business simply can’t seem to make sales breakthroughs. Clive Pintusewitz, head of Small Enterprises and Enterprise Development at Standard Bank, emphasises that communication in this regard is key.  “It is this most basic requirement that is forgotten. The owner of the business, because he or she has a passion for their products, simply makes the assumption that everyone is just as knowledgeable w

By Kobus Oosthuizen When purchasing a home or a car, the decision is driven largely by the specifications and actual condition. While these physical attributes are easily verifiable, a thorough assessment would require that one also considers such unseen aspects as the service history of the vehicle or the electrical certificate of the dwelling. With the purchase of a business, besides the physical condition of the fixed assets employed within the business, the general appearance of the business is not of great importance and should not significantly influence the purchaser’s decision. Instead, the valuation and assessing the possible risks inherent in the acquisition, is primarily based on what the eye cannot see. As previously explained, the latest financial performance figures and the balance sheet position of the business are the primary indicators employed in confirming the value of the business. The practical reality is that the latest management information, which should b

Chapter 6: Investigating the suspects – De Arbeider (The staff member) By Michael Said Let’s begin by clearing up a simple yet widely held restaurant misconception… Theft is not shrinkage! Shrinkage is when you send your tablecloth to the cleaners and it returns the size of a serviette. When someone decides to appropriate your tablecloth and take it home, then it is theft. Many urban legends abound about the restaurant owner who calls his staff into a meeting, “Guys” he pleads “we have a very big function tomorrow and we are short of cutlery and ashtrays, if you could all please bring them back just for the day tomorrow, you can restock your homes again next week”. If it wasn’t so sad it would certainly be funny. No, theft is not the only manner in which the staff are strangling the life out of the restaurant industry, neither is it restricted to any level or segment of the staff, and no, not all staff are stealing (some have already been fired… just kidding), unfortunately it is so

13 August, 2012 - Ability, talent, and flair are the drivers of a small business. Find these characteristics in a partner whose abilities complement your strengths, and you have a business relationship that can take an enterprise to new heights. But, say the experts, getting the right business partner on-board should be very carefully considered. Partners should understand each other, know exactly what their respective roles are and what they are expected to contribute to the business. With this in place and the essentials put in writing, chances are that these relationships will prosper, and reflect in the success of the business. That was the advice of the Business Coach on the Standard Bank-sponsored SABC3 series that advises real business owners on the challenges facing their small business. Clive Pintusewitz, head of Small Enterprise and Enterprise Development at Standard Bank, says:  “The dynamics of a partnership can literally make or break a business. Taking someone into a

Chapter five: Investigating the suspects – Capitán Franchisor “Franchising in not a democracy,” boomed the deep voice from across the room. “This is my brand and I will protect it at all costs!” By Michael Said The statement above could conceivably have been heard at any one of hundreds of franchise meetings held around the country each year. Only names and places have been changed to protect the innocent. The precarious relationship that exists between franchisors and franchisees has been a topic of debate for many years and will likely continue so for years to come. Is the franchisee to be treated as a partner? Absolutely. Without him/her there would be no income for the franchisor and they are dependent on each other for growth and survival. Should he be treated as an employee? Well, they are expected to toe the line, to work within the constraints of the franchise agreement and are subject to certain penalties if they step out of line. Should they be treated as a customer? Wel

6 August 2012, Johannesburg - Small business owners often talk about being “married” to their businesses and are unable to take a holiday or are hesitant to leave someone else in charge. Generally, entrepreneurs seem to try to do everything themselves, often worrying about the small stuff, and are probably not seeing the benefits that the right systems could bring to their business and their lives. A business that has systems in place is a business that is under control. Every business has policies and procedures to follow. An investment in accounting software means that finances are closely monitored, cash flow is regulated and invoicing and supplier payments are being made regularly.  Better still is the fact that the right IT system will also help manage stock effectively. There is therefore little danger of losing a sale because an item is unavailable. Get the systems monitoring finances and stock holdings correct, and the chances of success increase markedly. This principle