DEVISING AN “OCEAN’S ELEVEN” STYLE PLAN TO HELP A QSR FRANCHISEE RIDE OFF INTO THE SUNSET

THE CHALLENGE

The assignment began with a friendly cup of coffee with a longtime national burger chain franchisee. The conversation turned to the franchisee jokingly asking us if we knew of any good exit strategies from her business so she could retire to a plot of land she wanted in the state of Idaho. The challenge would be to quickly unlock her capital from her company’s real estate holdings and in parallel, create a strategy that would allow her to smoothly sell and exit her business. The final challenge would be to defer her capital gains taxes by purchasing a desired property in another state.

OUR APPROACH

First, we took a deep dive into the company’s real estate holdings to put a liquidation plan in place that would maximize sale proceeds. We noticed immediately that our client owned three commercial properties where she operated quick service restaurant (“QSR”) locations, as well as a small multi-tenant office property with some vacancy. We knew the QSR properties would be most valuable if sold as a leased investment property. We needed to generate some creative assignment language in the lease that would allow the operator to exit without hurting the value or salability of the investment. Next, we needed to find the right leasing brokers to lease up our client’s office property so it could be sold as a 100% occupied leased inventory. Finally, we needed to source a capable Business Broker who understood our situation and the sensitive timing of our strategy. Finally, we advised our client to immediately start building a productive relationship with the Seller of out of state property she wanted to purchase and retire to.

THE OUTCOME

We were able to utilize our national marketing platform to complete three saleleaseback transactions on her restaurant properties. These transactions were sold to investors as net leased investments on 20-year NNN leases, yielding premium pricing and maximizing proceeds for our client. Our business broker who was marketing our client’s quick service restaurant business for sale quickly located a qualified Buyer who purchased the franchisee business. A crucial step in the business sale included adding lease language to successfully assign the lease to the new buyer, freeing up our client to legally walk away. Finally, our leasing team leased up our client’s office building, which eventually sold as a leased investment. With the proceeds of all 4 property sales, our client was able to purchase her dream property and move out of state for retirement.

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