Comission Liability Question

[Randy 805]

Hey guys, I have a question regarding a location purchased a few years ago.  This location was purchased from a previous vendor who had ran this particular location for about 7 years, he had purchased it prior from another man servicing the location who also was not the originator as I understand....this location apparently at some point in the past was aquired or found by a company out of Georgia called Vendor's Group, what they do is find locations then get a local vending company to service the account in exchange for a monthly comission, the local vendor places his own machines at the location and starts servicing it.  So over the course of more than a decade this is how it's been done with this spot, then a few years ago I buy the spot from the guy servicing the location, he tells me that there is a comission due every month and I start paying it as I take over the service for that spot, but over time I've realized that I've never signed any contracts with Vending Group, nor have I signed anything with the host spot, additionally, after speaking with multiple people who run the host spot they have indicated they are not aware of any vending contracts signed with Vending Group either, in fact until a rep from Vending Group started calling the spot to check up on the service intervals they had never even heard of them, the spot then contacted me informing me that this rep had been calling and pestering them and wanted to know if I had any connection to them and why they were calling them, apparently from what I gather the host spot only ever dealt with the local service vendor and never even was aware of the existance of Vending Group.  So I start to investigate further and start to wonder why i'm even paying this comission to Vending Group if I bought the location from the previous vendor, but I then wonder was it even his to sell in the first place?  I guess my question is, am I obligated and should I continue to pay this comission to the company that found the location initially years ago or tell them we have no standing contract and to go pound sand?  The only thing I had considered when thinking of continuing to pay the comission was that at some point in the future if I maintained a good relationship with them I could use them to find other locations, but frankly I'm not interested in working with them.  The only other thing that may e a factor is that maybe this outfit Vending Group has a contract with the parent company of this locatin and is servicing all their spots nation wide and that's why the local spot I service has no idea of any prior contracts?

 

What say ye?

[orsd]

no contract? too bad for them- you aint even obligated to mail them dog golpher

not his to sell? too bad for the seller

if it gets bad, call the cops and report for telephonic harassment

[AZVendor]

Just from looking at Vending Groups website I can see that they are a Coke-connected vending management company.  Management companies are in business to earn money for themselves while not doing any of the work - a typical middle man.  Unfortunately they are able to convince many corporate clients to allow the management company to handle their vending in every location the client has.  This is typical in the retail sector and in some hotels/motels and they promise to ensure consistency in the vending at each location in equipment quality and size and in product prices.  The commissions paid go to the management company who takes a cut before sending the balance to the client.  Most locations of the client then never see any of the money themselves. 

 

As Vending Group's site boasts all about their Coke connections and says nothing about any other vending machines, are you perhaps running a Coke asset at this account?  As old as this "deal" is I would tell Coke to pick up the machine and put your own in if the account warrants it.  Your location would probably like to receive the commission for their own use as well.  If Vending Group complains then tell them to send you a copy of the original contract that is signed by the first or subsequent vendors operating there.  If they can't produce one then you are not obligated to them. 

 

Now while a vendor has no rights to the account if under a management contract, you do own the machines you place there (unless they're bottler assets), so you own the machines but not the location.  In your case you may not get much of a backlash, especially if the location wants you to stay.  Just remember that you might get a copy of an original contract that might say that the contract is perpetual or has automatic renewals or stays in force in the event of a vending company ownership change.  You will always have the right to walk away if you don't like the terms.  If you decide to do that then I would just stop paying the commission and when you finally pull your machines, if you even have to, just don't respond to anything they send you.

 

I think you're smart to stay away from management companies.  They are parasites and only look out for themselves.

[Randy 805]

Interesting, Thanks again AZ.  Ya, the site has 2 Coke machines there, I was told by the previous operator that they were his and he had the right to sell them but I'm not sure now, and I'm somewhat uncomfortable discussing anything Coke machine related in a public forum....  If I end up selling the location, how would that be structured since I'm not sure if I own the machines?

[AZVendor]

Since Vending Group deals with Coke and it sounds like it might be dealing direct with Coke, you probably don't own the machines but rather, they were installed by Vending Group or on their order placed with Coke.  Regardless of who services the machines they were probably placed by your bottler.  Do you call Coke for service calls of any kind?  Are there Coke asset tags or stickers anywhere on the machines?  If there are then call Coke and just ask them to run the asset and serial numbers to see if they still own them (they might have depreciated off of their books).  There isn't any risk in that and no one will come to get the machines as they get those types of calls periodically.  If you find out that Coke still owns them then you simply can't sell them, and if you don't own the location so you can't sell it.  The only thing you would have to sell is the right to service the location.  Basically offer to sell the gross sales potential to someone as long as they know they won't own the machines.

[Randy 805]

Well, I did kinda call Coke anonymously because i didn't want them coming and taking the machines, but I did give them the numbers off the tags and they said they were indeed their's but didn't know where they were...I hung up.  No, Coke has never serviced the machines to my knowledge, I myself have upgraded the bill validators & coin mechs from $1 acceptance / 3 tube mechs to $5 MEI Validators & 5 tube CF7000's, I keep them impecably clean and service them regularily.  The previous operator was servicing them full of rat feces, and rats nests behind the compressors, I've cleaned all this up, I wanted to install CC readers on them but have hesitated because I never really knew if they were mine and didnt want to be liable for damaging the machines if Coke ever wanted them back...

[AZVendor]

Kind of odd that they didn't know where they have been sitting for the last 10 years, but maybe they weren't up on their record keeping 10 years ago.  I wouldn't sell the machines if that's what they told you.  If you want to be done with Vending Group then have Coke pick them up and put your own in - unless the account isn't any good.  You might even ask Coke if they'll sell them to you.  Maybe, if the bottler can sell machines because Coke generally doesn't, they'll have a really good price for you.

[Randy 805]

Hmm, I always thought Coke and the bottler were the same entity and I've been told Coke never sells old machines but instead destroys them, that's why I was hesitant to let them now where they were, so it's possible if theyre bottler owned then they might sell them?

[AZVendor]

It's always up to the bottler if they are independent of Coca Cola Consolidated.  The CCC or what use to be CCE, Coca Cola Enterprises, is always realigning their regional bottlers, trading territories between bottlers and consolidating bottlers so it's hard to say what they would do other than say no.  However, if you were to even consider buying them, maybe you should just go find your own machines that you can put any products into and dump the old Coke machines.

[Randy 805]

ok, well this gives me something more to consider & think about then, thanks again!

[AngryChris]

I have one account with vending group. It was a coke account but coke pulled out. They asked me to do the vending and I did. I pay the commission because they have the cintract. The only decent thing about it is that they are pretty laid back. If you can avoid their commission thoug,, do it.

[allen watson]

I was in the same situation. Bought a route with a commissioned location. No one at the location ever heard of Best Vendors. Come to find out the contract was with the Parent company in Georgia. Took a couple months to figure it all out.