Five Keys to Successful Next-Generation Store Transitions
Most restaurant groups have excellent programs for transitioning restaurants to the next generation of owner/operators. While the company provides guidance, there is still much to consider and to plan for in order to execute a successful transition.
- Be proactive and allow sufficient time for planning. Don’t wait until you are ready to retire to make a transition plan. The next generation owner/operator in your family needs to be eligible for growth and rewrite. The brand may limit the number of restaurants he or she is able to acquire. Make sure you plan well in advance to ensure complete transfer of restaurants to the next generation.
- Consider rolling the next generation owner/operator into the parent’s organization. This arrangement will allow growth and rewrite to be determined at the organization level and may assist next-generation operators with growing their business.
- It is okay to sell your next-generation owner/operator a restaurant at a discount. Keep in mind that the discount is considered a gift, enabling you to take advantage of the current gifting laws that may allow tax-free transfers of ownership to the next generation.
- Conduct family meetings on a regular basis to discuss your transition plans and succession planning. Open communication is critical to a successful next generation plan.
- Seek advice from your attorney, accountant and financial adviser. Use your TAG Team (Trusted Adviser Group) in order to fully realize the benefits of the next-generation transition for both the parents and the new owner/operators.
If you are considering making a transition to a next-generation owner/operator and would like to explore ways to make the transition go smoothly, contact Bruce Berry, Director. Bruce works closely with restaurant franchise owner/operators.