MANDATE REPORT
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1. History Background
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Fully describe the business's activities
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The Franchisor provides the system, support and leads. The current clients is two well established business clients that provides a steady income. You have a franchise that does payroll and accounting up to trail balance. Now to use this stepping stone to grow. The current owner does not do personal taxes but instead refer those to other franchises. The purchase price INCLUDES the franchise fee of R140,000.
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How long has the business been established?
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2014
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How long has the owner had the business?
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He started it
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2. Present Market
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How does the business operate on a daily basis
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Owner operated. He works from home, so this is ideal for someone looking to enter the market with a franchisor backing and a client base to or a stay at home mom with and accountancy qualification.
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How are the clients attracted to the business
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Word-Of-Mouth
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What Advertising/Marketing is carried out
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Franchisor does some, and you should do as well and canvas in your area. The franchise has a nice area where they can canvas, although business from anywhere can be obtained and serviced, just not canvased
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Does the business have any contract work
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The two monthly clients pay fixed monthly rates ensuring a stable income. Th seller is willing to warrant this.
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What competition exists
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Normal accounting practice competition
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What are the seasonal trends
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Because of the fixed monthly income, no trend in this instance
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3. Financial
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Is the business VAT Registered
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No
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What VAT documentation is on file?
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No
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Are there up to date management accounts?
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The turnover generated monthly can be confirmed by the franchisor to whom royalties are paid
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What audited financials are available, income statement and or balance sheets?
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None, see above
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What is the age analysis of the debtor’s book?
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7 days credit basically on Invoices raised monthly
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How could the profitability of the business be improved?
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Grow the number of clients
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Is Seller finance available and for what amount?
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The seller will finance R80,000 of the purchase price tied to a turnover warranty. This is calculated as 50% of the client income for 12 months. R40,000 payable after 6 months, the balance after 12 months
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4. Staffing
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What is the total staff complement?
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No Staff
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Staff Breakdown and length of service
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N/A
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Do any receive special perks, bonuses or incentives?
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N/A
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Are they on contract?
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N/A
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Do any have management potential?
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N/A
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How involved is the Owner in running the business
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Owner Operated
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5. Premises
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When does the current lease end?
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No lease, work from home currently, plus you buying the client base
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Is there an option of renewal & what period
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N/A
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What is the annual escalation %?
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N/A
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What are the trading hours?
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Normal office hours are kept but in reality you work as it suits you
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What is the square meterage of the business?
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N/A
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Is a copy of the lease available?
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Yes
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Do you require a licence?
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The franchisor will expect you to have a formal accounting qualification and membership of one of the professional accounting bodies like SAIT, SAIPA, SAICA, SAIBA, ACCA etc.
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6. Assets
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Is a full asset list on file?
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N/A, you buying the franchise and client base
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Are any items not included in the sale?
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N/A
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What is their overall condition?
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N/A
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Do any require repairing?
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N/A
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How have they been valued?
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N/A
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Which assets are on lease/HP and with whom?
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N/A
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What are their settlement amounts?
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N/A
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Will Seller settle or Buyer to take over?
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N/A
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Are they presently insured?
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N/A
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7. S.W.O.T. Analysis
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Strengths
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Franchise with support and guidance, fixed income, business clients
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Weaknesses
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Not enough clients yet, will have to grow
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Opportunities
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More clients can be added if you are willing to spend more time than a few hours per day
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Threats
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None perceived
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8. Reason For Sale
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What is the reason for the sale?
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Seller is doing other things that requires his focus.
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9. Conclusion
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Why is this a good business to buy?
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Strong franchise
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