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Route for sale, owner will let me work to buy


RikaKazak

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So a 50ish machine soda route came up for sale on craigslist, and the owner is willing to sell in exchange for work.  (aka nothing out of my pocket)

 

I only have $6K set aside, and that's going to a trailer I'm trying to buy right now (and anything left over towards 3 soda machines and 1 key master locations waiting).

 

So I was curious, anyone have any good idea how to structure the deal?  He doesn't own the machines (they're bottler owned) the route has been established for 6 years, and he claims it does $750-$1,700 a week depending on which route he runs and time of year (he runs 2 different routes).

 

I was thinking, I run the route, get credit for 50% of gross, and a purchase price of $25K (so basically I would have to run $50K gross, or about 1 to 1.5ish years then the route is mine)  Also I wanted the option to buy the route at any time...example:  I do $30K gross, get credit for $15K.  Then come out of pocket for $10K and the route is mine.  

 

I seriously have NO idea what's fair/reasonable, I've never done a purchase this way, but he really wants out and I love the idea of my work buying a route.

 

Thoughts?  Opinions?  Am I just being stupid?  Feel free too be honest and bash me if need be, I'm an idiot who has no idea what he's doing, but just trying to do his best.

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You would likely want to extend the terms to be able to put some profit in your pocket each month.

You really need to know the yearly gross. Not this weekly variable stuff and if your selling bottles or cans so you can determine your profitability. For example, let's say the route grosses 5ok.

Example 1: you sell cans for a dollar apiece. Cost of a can is .40 with deposit(if you have that). This means that .60 is profit or 60%. 50k gross times 60%=30k profit.

Example 2: you sell bottles at 1.50. Cost of a bottle .90 with deposit. With .60 being profit or 40% profit. 50k gross times 40%=20k profit.

You want your payback(price of purchase) to be less than a year of profit. I would try to extend the payback period to be able to put some cash in your pocket each month. You'll find most sellers realize that you need to make some money. It's Always Good When You Don't Have to take money out of your pocket. Good luck!

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To begin with, if these are bottler machines then you won't own squat. The value of a route (or location or anything in between is based on hard assets plus sales or net, etc.). For example, IF this was worth 100% of gross because it includes owned machines with good volume, then this is worth less than 1/2 of one years gross since no machines are owned. Anything more is just blue sky.

Second, you need to find out from the BOTTLER if you can assume the use of the machines and become a new third party vendor with them. That is a real issue in many areas as the bottlers try to pare down the number of vendors they deal with.

Third, bottler machines come with rules - no foreign product in them, do your own minor repairs, you must purchase a minimum required amount of product per machine from them each month to keep the machines. If the volume doesn't allow you to sell the minimum case counts across all of the machines then you're screwed.

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