First time purchasing restaurant NNN due diligence and site visit

[Rina Amir]

When purchasing a NNN restaurant what do you look for during due diligence and visiting location?

I know we'll do Phase 1. We'll get financials from franchise few years back (how many years to ask for? They have been on location many years, it's a lease back). What else? When visiting location what do you look for? 

Also, How important is it to have a detailed LOI? Since seller will most likely counter with their own LOI.

[Joel Owens]

There are some LOI's where certain parts could have binding language upon you that could be detrimental.

Also the sellers LOI's tend to be slanted for the seller. The ones I use have it where they cannot except other offers from other buyer while under our LOI.

This blocks out other buyers from submitting higher LOI's and having the seller try to jump ship or play you against the other offer to try and get you up on price.

If you have the property locked up under LOI for say 3 or 4 weeks then the seller is more willing to negotiate on the PSA during that time and loses leverage.

So LOI is important in how it is structured.

The attorney needs to be a commercial attorney specializing in retail. Mistakes can cost you big money.

Are you not using a commercial buyers broker? Seller has accounted for the commission anyways and so has the listing broker if they have one.

So basically you have no benefit to not using a buyers broker in your corner.