Author Topic: In-laws selling their restaurant... website hosting and domain payment question  (Read 630 times)

jeromedawg

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Hey all,

My in-laws are finally selling their restaurant. Should be a huge burden off their backs... that said, I was a bit curious about the timeframe and responsibilities here. Their website hosting/domain expires in December and will need to be renewed as the new owner will just be taking over the business. My father-in-law and the new owner agreed that the new owner would officially take over on January 1st. Does he just have to suck it up and pay for the renewal fee for the web hosting and domain name? Or should the new owner be responsible? The broker is saying that the handover of the business includes all these items as 'goodwill' so it sounds like he will have to pay for it. AFAIK, that's the only thing they prepay for but I need to follow-up and check.

cchrissyy

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Usually, domains are renewed in 1-year increments while hosting is only obligated and paid monthly.

Yes, the right thing to do here is keep those active until the new owner takes them over, which probably means paying ahead 1 year of registration and a month (or less) of hosting. Luckily, registration is very cheap. I mean, I don't know what company your in laws are using so I can't quote a price, but, it's the sort of thing where you wouldn't bother figuring out a split and writing it into the legal deal because the minutes asking the lawyer about it would cost more than what you're asking about.  But definitely they should check their settings and make sure they only renew the domain for one year and make the hosting bill by month, in case they had ever switched those to longer terms in order to save money in the past.

jeromedawg

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Thanks - that makes more sense and what we will seek to do. The registration will cost around $13 or so and if I'm able to switch to the lowest cost month-to-month hosting (which should be sufficient as it's literally a website with some pictures, info and menu and very little content otherwise), which is $2.99/mo. The yearly web hosting cost is $26. At this point, we're trying to figure out what places we can penny-pinch because of the fact that my FIL accepted the first serious offer that came to the table and didn't even think once about countering or negotiating (and the buyer asked for seller financing and is paying 8% interest which seems a bit low for commercial, no?)....smh.

bwall

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It sounds to me like he was physically and emotionally exhausted and just wanted out.

What percentage is owner financed?

jeromedawg

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It sounds to me like he was physically and emotionally exhausted and just wanted out.

What percentage is owner financed?

He and my mother-in-law definitely are, my MIL more so. He was actually *not* wanting to let go but was in plain denial. He was desperate to take the first offer since it was apparently the first serious offer they've gotten in several years. He accepted an offer of $180k with with $120k down and $60k of seller financing at roughly 8% back per month. I think their broker may have prodded about negotiating and even mentioned that if my FIL takes the offer as is w/ the seller financing, it's a win-lose rather than a win-win. What's bothersome is that they say they don't want to be a burden on us but we know it will likely come to that and this whole thing just exacerbates it. They have little to nil retirement savings (no 401k, no investments, nothing...just stockpiles of cash, a CD and a couple savings accounts accruing 2% or less of interest). We fear for their "golden years"

bwall

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I know this won't be much consolation, but $120k down and $60k owner-financed at 8% are not the worst terms imaginable.

I was afraid you'd say 80%, 90% or even 100% owner financed, at which point the new owner doesn't have much at stake. As it stands now, if the new owner can't pay the note (although very unlikely with 2/3 down payment), then your in-laws would get it back and be back in the restaurant business and have to sell it--again.


jeromedawg

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I know this won't be much consolation, but $120k down and $60k owner-financed at 8% are not the worst terms imaginable.

I was afraid you'd say 80%, 90% or even 100% owner financed, at which point the new owner doesn't have much at stake. As it stands now, if the new owner can't pay the note (although very unlikely with 2/3 down payment), then your in-laws would get it back and be back in the restaurant business and have to sell it--again.

Thanks for the info. I guess it's not that bad - at least they're getting something back, right?

The broker said he's not concerned about the buyer's financials and that she has plenty of funds, so it's unlikely she's going to default on anything. It seems pretty low risk.

bwall

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It does sound low risk and it probably is.

What if the new owner doesn't like the restaurant business?
What if they make 'improvements' and the long-time clientele doesn't like it/respond as planned?
What if the economy tanks and people go out to eat less?
What if aliens invade tomorrow.....

These are all out of your control, of course. I think that a lot would have to happen for someone to walk away from $120k, but, you never know.

How is the $60k secured? By the restaurant? Or also by the individual personally? Meaning, how easy will it be for them to walk away from that $60k note if the s* hits the fan.

lhamo

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Do you think this deal is bad?  Because if somebody I had just offered nearly $200k to started quibbling over $39, I would be inclined to walk.  If you want them to walk, fine.  If not, just pay the domain fees and be done with it.  If you start going back and forth over little details like this chances are the buyer will find lots of other ways to eat up your time/energy, and maybe your money, too.

This is kind of like the insurance bill you were fretting over.  Sometimes you need to let go -- you are wasting more valuable time/life energy trying to get those little bits of money back than they are actually worth.

jeromedawg

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Do you think this deal is bad?  Because if somebody I had just offered nearly $200k to started quibbling over $39, I would be inclined to walk.  If you want them to walk, fine.  If not, just pay the domain fees and be done with it.  If you start going back and forth over little details like this chances are the buyer will find lots of other ways to eat up your time/energy, and maybe your money, too.

This is kind of like the insurance bill you were fretting over.  Sometimes you need to let go -- you are wasting more valuable time/life energy trying to get those little bits of money back than they are actually worth.

Honestly I don't know - we're just looking out for my in-laws however possible, and don't want them to get ripped off. They're the kind of people who can't say "no" to anything and sign contracts without reading - my wife is the complete opposite because she was scarred from all that nonsense. Anyway, all of this is not transparent from the buyer's perspective - there's no back and forth with her. We're just looking for ways to transition things over as smoothly as possible without incurring additional and unnecessary expenses. There is another one of these types of things that has come up but on an even larger scale, that being the liquor license - the new owner wants to start on 1/1/19 and the transfer of the license likely won't be complete by then. Which means she will be selling alcohol under my father in law's name. The broker was saying something like how she should pay up front for that and take it out of the seller financing portion (like $20k) but I don't know if that includes the interest part and or more. We're not really sure what it's supposed to look like with stuff like this... like who should concede to paying for what in given circumstances.

On the other hand, the broker is already asking my wife to help out with things even though it's not *her* restaurant, so I think we have to draw some lines as far as how much she is going to do and what not. e.g. transitioning all the online ordering services over to the new owner, etc... I think she's just going to cancel all that and not deal with transitioning, except the broker may say "well this is part of the restaurant sale and in goodwill so you need to do it" - so not sure how things will look at that point.
« Last Edit: December 07, 2018, 10:38:52 AM by jeromedawg »

jeromedawg

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It does sound low risk and it probably is.

What if the new owner doesn't like the restaurant business?
What if they make 'improvements' and the long-time clientele doesn't like it/respond as planned?
What if the economy tanks and people go out to eat less?
What if aliens invade tomorrow.....

These are all out of your control, of course. I think that a lot would have to happen for someone to walk away from $120k, but, you never know.

How is the $60k secured? By the restaurant? Or also by the individual personally? Meaning, how easy will it be for them to walk away from that $60k note if the s* hits the fan.

The new owner seems pretty invested - my father in law has been spending *a lot* of time on working with her on all this and he hasn't even received the deposit yet. It's a pretty unique situation because the landlord was very picky about who would come in and wanted it to be someone who would just take things over. There aren't many people willing to do that but I guess as the price of the offer for the business got lower more people became interested haha....makes sense.

jeromedawg

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One more question around this:

My wife and I are not the owners - my in-laws are but they have used us as resources for helping with setting up and maintaining both the website as well as online order services (Grubhub, Eat24, etc).

Per contract, the transfer of all this stuff to the new owner is one of the contingencies of the sale... but what is the scope of how involved we are supposed to be with helping in the transfer.... in other words, if the new owner starts asking us "Hey can you just do the entire thing? Set up a new account for me at your domain registrar and hosting company, and transfer all of it over for me" that would be outside of the scope of what we're supposed to do as representing my in-laws right? And if she wants that level of help, should I then offer my services at a billed rate as a contractor? Or are we supposed to just spend our time doing all this as part of the "goodwill" of things? I would assume the new owner *should* have all her stuff together and her own resources to manage the other half of the transfer - e.g. she [or one of her resources/employees] should have her own hosting provider and domain registrar and should have all that setup to where they let us know the email and owner's name to transfer to. For online ordering, she should be setting up her own accounts and my wife closes/cancels the existing accounts etc (especially because those are tied to bank accounts and taxpayer IDs) and we remove links for online ordering from the website before handing everything off... Does this sound about right?
« Last Edit: December 10, 2018, 12:50:52 PM by jeromedawg »