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Graham Allman Managing director GA-Select The great debates goes on. First off, are up-front fees ethical and professional, or just a ruse to take...

Graham Allman

Managing director


The great debates goes on. First off, are up-front fees ethical and professional, or just a ruse to take money from gullible or maybe over-aspirational licensees?

Some large and well-known agencies charge up-fronts as do some privately-owned business transfer agents. The choice of an agent with a strong Royal Society of Chartered Surveyors background could be favourable as opposed to an agent who has a robust business and trade background, with business qualifications to support them, or a franchised business run under the umbrella of a large marketing company. Then there is the choice between a specialist agent only working within the licensed industry or a more general agent selling all types of business opportunities. Should you chose a national agent or one with a strong but limiting regional presence, and what about agents with multiple offices as opposed to ones with a single HQ and a strong, modern computer link with field-based associates?

Should you, as the client, have access to the agent's offices or is the practice of "closed doors" acceptable? Then there are those agents who prefer to remain "men of the night" and are not allowed by their firms to disclose their identities, or does an agent whose face appears openly in the trade papers appeal to you more?

Is a six-month period acceptable as a reasonable time to sell your business or is three months adequate? What about the 12 month terms being used by some agents, are these fair? Is it reasonable to expect to be able to talk to your agent at weekends and during the evenings? After all, it's when licensees work?

What about conflict of interest? Domestic estate agents would be deemed to be "cowboy" operators if they purchased their own houses and rented them out or sold them on again; is it reasonable for selling agents to do this with pubs? Should selling agents have trading licences from the Office of Fair Trading when giving advice on how best to finance a purchase?

Do you require your agent to only work as an agent, or are you happy for them to run other businesses alongside the agency? What of the well-publicised practices of some training companies that offer pubs to the unsuspecting, tied into or on the back of their training and finance.

This brings us on to valuations. Just how should your business be valued, by sales or profits or a bit of both? Then again what else affects a valuation? Is it comparable sales or desirability or just what you want to achieve for it? Will the agent overvalue to get that up-front fee or to win the instruction, or even undervalue to get a quick sale? Who decides just what the correct value of your business is? Is it more than "a measurement of want"?

Then ask the question to purchasers: would you trust the valuation of an agent who takes up-front fees or be more comfortable to buy from an agent who does not? That's an interesting one.

I believe that the agency industry should not offer not just one solution, but a raft of them, because, after all, you pay your money and you take your choice.

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