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  • #989160
    dillym
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    Being part of a franchise group of mainly sole traders and companies with one – three people working for them , I have a question about how much to pay for the database of one of the franchises who want to sell.
    He has owned his franchise for a year and has a good customer service rating and people seem to refer him on.

    His problem is a money management and cashflow one.
    I only want to buy his database of customers.

    He has 320 customers on his list and had focused on clients who might need repeat business.
    Each customer will spend aprox. $200 per service.
    With proper follow up other people will get up to 75% return rate each year.
    I also cross market other services to my database .
    My question is how much should I pay for his list.?
    This is all I want , not his franchise.
    Any advice would be appreciated.
    Thanks guys.

    #1170723
    Anonymous
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    Hi dillym,

    Welcome to the forum, and thanks for joining us :)

    This recent thread discussed methods for valuing a business for sale, and might give you some good tips for valuing the database… it’s not an exact match to your question, but may be helpful all the same.

    Good luck with it all,
    Jayne

    #1170724
    Tony Manto
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    Being part of a franchise I don’t think that buying the data base is the answer and I would dough if he could sell it on its own anyway.

    His customers are his customers and stay with him for a number of reasons.

    That’s not to say they will not do business with you, but chances are you may loose some off them. 25 to 30%

    If the nature of this business is business to end user, then yes its worth buying the data base.

    If its B2B then what’s to stop you finding these businesses yourself and getting the business.

    If he is going out of business anyhow, perhaps all you have to do is wait.

    To answer your question you need to calculate how much that data base is worth. You mentioned that there was 320 customers on the data base.

    The 80/20 rule dictates that 80% of your business comes from 20% of your customers.

    Therefore I would calculate 20% of 320 = 64 x $200 = $12,800 per year

    #1170725
    dillym
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    Thanks Guys,

    He is allowed to sell his customers as he is going to hand his Franchise in.

    The rules are not as tight as you might expect.

    On speaking to a number of people it seems it is a little hard to value.

    It is a very retail focused franchise and people are a loyal but in the long run I suspect the 80/20 rule will apply.

    Thanks for your help.

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