When do you consider this?

M

mini1

New member
I sold a detailing business that I built from the ground up, based on a royalties agreement. I get a certain percentage of the job total every time the company, which I sold my client list to, completes a job. I had initially thought that the detail company that I sold out to would be able to handle all of my clients......well they are overwhelmed. They informed they that won't be taking any of the maintenance mini detail jobs and will be focusing only on the big jobs.



So I reached out to the runner up who wanted to buy the my business. He is interested. We are in the middle of negotiations. We are getting stuck on one major issue.



If his company ever serviced my clients, he wants to be exempt from his royalties payment to me. I say that if he didn't service them within the last year and they used my services, then they are considered my clients and would be due royalties to me.



If I don't put this in the contract, then he could claim that he used to service every single one and never pay me a cent.



What do you think? Fair or not fair? When do clients change "ownership status"? That is the big question.
 
JohnKleven said:
I would just sell it for a larger lump sum, and be done with it.
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Agreed...sell it as a lump sum. The monthly cash flow would be nice but how do you know that you are getting your fair share...there are so many ways to get screwed.
 
JohnKleven said:
I would just sell it for a larger lump sum, and be done with it.
Click to expand...



That was my first idea. Did not work. I couldn't find a single person who would spend money on a list that they don't know is good or not. I sure wouldn't. How would I know each and every contact was good on that list? You don't. Plus nobody has the cash to put down up front anyway.



My first Royalties contract is working very well right now. It can be done. You need to check at random with the clients to get job totals so you know you are not getting screwed.
 
JPostal said:
how do you know that you are getting your fair share...there are so many ways to get screwed.
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Audit their books every so often. It's all in how you make the formal agreement, you have to be careful, but there's way to ensure that you don't get screwed.
 
Selling a business is like a divorce, it should be a clean and permanent break. You are allowing this guy to ruin the business you built. You say its working but it sounds like it isn't. What if this guy flakes out then what happens?



I sold my 2 four bay detail shops in auto malls three times and carried the contract and in every instance after a year or so when business got tough and they had to work harder and smarter they walked out. Could not sue sue them for they had nothing to get.



If no one will pay you what you want for the business maybe it is not worth it??



If you persist in a royalty basis I suggest it be set up with a monthly minimum to insure you are getting a certain amount every month.



Call me cynic but the program you are on it going to allow the buyers to cheat you and most will. What I have learned after 40+ years in business is you put your money in the hands of honest people and they will eventually justify taking some of it. Has happened to me everytime I was lack on cash or inventory control.



Your program is worse I think. The buyers will eventually resent having to give you money for doing nothing and they will justify cheating you. That is why you need a minimum.



Trust everyone, but always cover your arse



Bud Abraham









mini1 said:
I sold a detailing business that I built from the ground up, based on a royalties agreement. I get a certain percentage of the job total every time the company, which I sold my client list to, completes a job. I had initially thought that the detail company that I sold out to would be able to handle all of my clients......well they are overwhelmed. They informed they that won't be taking any of the maintenance mini detail jobs and will be focusing only on the big jobs.



So I reached out to the runner up who wanted to buy the my business. He is interested. We are in the middle of negotiations. We are getting stuck on one major issue.



If his company ever serviced my clients, he wants to be exempt from his royalties payment to me. I say that if he didn't service them within the last year and they used my services, then they are considered my clients and would be due royalties to me.



If I don't put this in the contract, then he could claim that he used to service every single one and never pay me a cent.



What do you think? Fair or not fair? When do clients change "ownership status"? That is the big question.
Click to expand...
 
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