breaking exclusivity agreement with broker

question: did anyone break the exclusivity agreement with hired broker,and if yes,how did it work out?
story: i contacted a broker who told me that he knows someone who would be interested in buying my store,all money upfront,less than i would want to sell for but negotiable. but, before we get to talk to mentioned interested party,by the broker,i would have to sign exclusivity agreement as a common business practice and a “technicality”. so i did.
now, it turned out that the interested party already purchase other store, and its been 4 months and i didnt even get an offer,any offer,not even lowballers. i am asking for the store less than similar in the area with higher sales.,now,i have a family interested in buying said store,but…,they dont want to deal with broker,as the price will go up simply cause of his commition. if i sell to them,i strongly believe that the broker should get nothing,cause he did not sell the store. but as agreent says he still gets his 10%. anyone has experience in such matter? thank you

How long is the contract for?

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6 months ,expires in october

Bodega can probably answer this better for you.

You most likely will be on the hook for commission if you sell during the term. They will take you to court .

Can new buyer wait until expiration of contract?

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we havent discuse it in more details- they are interested and on the market to purchase,they live in town and owned the restaurant and a pizza store in the past.so i d say they are serious enough. some one i know suggested i offer the broker half of the commission,to smooth things out,would it be enough,or the brokers go all or nothing?!
thanx

Ouch, The way I see it is that this broker was less than honest, I would speak with an attorney and see if you will have repercussions from breaking this contract.
If the attorney is confident that the broker will go away without too much butthurt, go for it, but be ready to be in court against a lopsided contract.
I’ve been involved in cases with very one-sided contracts, and most judges will void them on principle

  1. Contact the broker IN WRITING and tell them you want out of the contract. Ask the broker for a list of buyers they have provided information to regarding the business and copies of the associated NDAs. Be prepared to pay commission on any sale to any of these identified buyers within the holdover period of the listing agreement.

Did they collect financials and prepare a summary for presentation etc? Is the business listed on the broker’s website? Other online advertising such as BizBuySell? If not, they have failed to market the opportunity which is a breach of their obligations and would also tend to show that they only intended to present to that single buyer.

  1. If they decline to cancel, tell them that in that case you will need to speak with their employing broker. If they ARE the employing broker never mind this step.

  2. Explain IN WRITING why you are dissatisfied. Focus ONLY on the misrepresentation of the listing and NOT on whether they deserve a commission on a buyer they did not find. The broker could have/should have offered a “single buyer” listing. If they will not cancel, tell them you will need to file a complaint with the licensing authority in their state. (Google real estate license and the name of your state to find this) This is a big deal that brokers will want to avoid.

  3. If you have to, file the complaint. It will help a lot if you reach this step to have things in writing.

You would most likely be able to resolve this without going to court as long as you did not have another buyer in the wings and are trying to void this contract to avoid commission on a sale that is waiting to be made but that is not the case. If the broker is aware of this other buyer you are going to have a problem.

Going to court or filing a complaint are both going to take time and should be avoided by all parties if possible.

Consider a compromise of a reduced commission if they decline to cancel.

Thanx very much for all the replyes. My “interested party” seems not to want to contact me with their lawyers contacts so may be they are not so interested. As for the broker he does add on biz buy sell,but not on CL,which is strange cause not only CL is free,but also i have an add there and get atleast 2 replyes a month!
I have a question for bodegahwy:
It was mentioned that u have a brokers licence may be you can help me out with pricing of my store or atleast your opinion,
We do anywhere from 4800 on a bad week to 7300 on a good. During colder months its stays above 6000 slows for summer. As an owner operator my labor is 18% ,my food cost is 28% have an amazing long leaese of 15 years rent 1300,includes nnn trash and water! I am selling to get 80k and strongly believe it worth,ATLEAST that,cause the store can push as much as 9-10 Give it time. A few lookers who came in either did not believe that i do those sales bymyself(which i could easily proof) or they believe that food cost is too low so i am not doing the sales i claim, or simply the reason i am selling ( commuting about an hour each way give or take) is not good enough reason to sell,so “obviously i am hiding something” ))
In your opinion as a broker and as an owner,how much should i ask for my store? Thanx

Craigslist is a great time waster. Sure, plenty of inquiries but no good ones. I never put listings there either. Serious buyers eventually find the business for sale websites.

Scroll through my older posts. I posted a long piece on pizza store valuation a couple of years ago that may help you. http://thinktank.pmq.com/threads/selling-your-pizza-store-what-is-it-worth.13300/

If you want a valuation for your business I can do that too (I do business appraisals regularly)… but I get paid for that.

Ok,thanx i shall chem 'em out.