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Reform and regulation needed for the business broker industry

Just had yet another broker waste a whole day of mine because of another misleading advertisement. The whole listing system needs to be reformed. I can't believe the latitude this industry gets away with in how they list their businesses. I have an idea: tell the truth and don't hide behind technicalities.
This last listing was " Bustling cafe 50k, owner needs to sell immediately which is why the price is so low. Owner net 6k per month." It turns out the owner is selling because he wants to move to a bigger place down the road and will not allow you to keep the name or the concept. The listing should have been "Asset sale 50k for ffe, take over lease." No claims of income or type of place it was should have entered the listing AT ALL. Also he could have told me that in the 30 minute phone conversation I had with him before I sent him the NDA and waited the whole day for the exact details of the listing.
The sad part is this is one of the better broker experiences I have had.

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Answers (4)
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oops--- meant Mike

Apr 15, 2011
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Don, great input as usual.
Mark-- been there myself.
The thing that gets me on this was the broker and I had a lenghty conversation on what i needed from the place. I asked him if the owner benefit was true that he listed and told him that I would be the only working owner and we had two small kids so only one of us could work at a time. He assured me that the cash flow was real and then proceeded to tell me the owner only works a limited schedule and even takes long vacations. He then told me he needed to sell fast because of another venture. It was only after the NDA process was complete that he told me the biz was not for sale just the ffe and take over the lease. What was the point?????????

Apr 15, 2011
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Average Joe,

Consider yourself lucky, I've wasted several days and even flown and driven thousands of miles before I found out what only took a day of your time. It makes you wonder why they would even take some of these listings. Last week I flew 1500 miles to Idaho and drove another 300 to find out that the rental company for sale managed property in a resort that had filed bankruptcy! Last year I traveled 280 miles to a business that was supposed to be thriving...the grass/weeds were shoulder high and I'm over 6' tall and they had NO business. I asked the broker why he would take such a listing, he just said he was sorry. I can't for the life of me figure out what they think they are gaining by wasting both our times.

I don't think you can regulate stupidity. It's really nice when you do get a honest broker. I like it when they have the knowledge and ethics to tell you up front what is really going on with one of their listings.

Apr 12, 2011
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The BAF Group LLC

As a Broker, I don't disagree with you that regulation is needed in most areas. In Maryland - where I am - Business Brokers are not licensed, as they are in about eleven (11) states. Unfortunately, I am uncertain that the situation that you describe would be alleviated by regulation. We deal with attorneys on a daily basis that "hide behind techicalities". What you describe is unfortunately not a Broker problem, it is an American business cultural problem. And it is not new. Advertising of all kinds is rife with that kind of "sell them the sizzle, and not necessarily the steak" strategy. And Buyers...we get the same kind of treatment from Buyers, as well.

This is not to say your complaint is not legitimate. I agree with you. Part of what is amazing to me is a Broker that would do that kind of thing, and waste his own time, along with yours! Business Brokerage is normally something that is extremely time consuming, since we cannot just throw a sign up in front of a restaurant, like a Real Estate Broker would. (And many of us are, in fact Real Estate Brokers, so I am not dissing that group!) That means that the overwhelming amount of detail must, by necessity be provided on the basis of verbal communication. In wasting your time, he is making far more work for himself as well, and (obviously) creating ill will with you, along the way.

Apr 12, 2011