KandMVending Posted January 8, 2009 Share Posted January 8, 2009 Hi all, I am new to the site as well as the vending business. I need to purchase an existing route that I can generate a full time income from. I have been dealing with a seller who has a 2000 location bulk vending route and would sell me a piece of this route, but I think the price is too high. He is asking for $142,000 for 250 heads that supposedly generates a net of $1,700 per week. I don't know the type of equipment that is in place, but even if it is top of line the price comes to $568 per head. I know established locations are a major benefit of buying an existing route, but the price still seems too high. Any responses on this would be greatly appreciated as well as any additional comments on how the value of an existing bulk route should be calculated. Thank you and it is great to now be a part of this community. Ken (New Jersey) Link to comment Share on other sites More sharing options...
Beer980 Posted January 8, 2009 Share Posted January 8, 2009 Well those sound like top notch locations with those numbers but we need a little more info to look at. How often are they serviced to get these numbers. 250 triple machines doing the $20 average per month is $5000 gross. Now if these are singles then it is $1750 a month gross based on averages. That is quite a diference depending on head count. How did they arrive at $1700 net a week? The price does sound high at face value. Link to comment Share on other sites More sharing options...
KandMVending Posted January 8, 2009 Author Share Posted January 8, 2009 Thanks for getting back to me. I don't yet have the breakdown of the equipment (triples or singles), but we are talking about a total head count of 250 (not total machine count). For the numbers perspective, it is the same as having 250 singles. I believe they are serviced on a 5 week cycle. Are you basically saying that each head will produce about $7 per month on average? The seller is basically stating that each head should produce about $7 per week. Please let me know what you thing. Thank you. Ken Link to comment Share on other sites More sharing options...
Bravo Duck Posted January 8, 2009 Share Posted January 8, 2009 NO WAY, NO HOW is he AVERAGING $7 per head NET per week over 250 machines. And even if he was his price is still too high. You can create this same income from scratch for less money ( more work, but less money). And if you create it from scratch YOU have total control over all aspects of your business, ( equipment etc... ). Link to comment Share on other sites More sharing options...
KandMVending Posted January 8, 2009 Author Share Posted January 8, 2009 Tom, Thanks for getting back to me on this. If I still wanted to look into buying an existing route, do you know how I should go about determining an appropriate value? Should it be a multiple of the net or a value based on the equipment? From a previous response It sounds like you really need 250 triples or 750 total heads to produce a net of $5,000 per month. I am asking because I don't think I really have time to build up a route as I need the income of an established business. Thanks again. Ken Link to comment Share on other sites More sharing options...
lurtsman Posted January 8, 2009 Share Posted January 8, 2009 Just a word of warning from another newbie. Investing 100,000$ is a very big step for someone without experience in the field. I understand your situation may call for immediate employment, but this is a very risk way to try to get in -- especially if you are using debt to finance the purchase. Link to comment Share on other sites More sharing options...
timberframe50 Posted January 8, 2009 Share Posted January 8, 2009 There is a wealth of information on this site about purchasing exsiting routes. I have found that using the search function saves me a ton of time. Link to comment Share on other sites More sharing options...
KandMVending Posted January 8, 2009 Author Share Posted January 8, 2009 I definitely agree with being as cautious as possible. I will do a full due diligence of any business I get into. How are you faring so far in the vending business? Link to comment Share on other sites More sharing options...
KandMVending Posted January 8, 2009 Author Share Posted January 8, 2009 Thanks for the info. Using the search function helps a lot. Link to comment Share on other sites More sharing options...
caserri Posted January 8, 2009 Share Posted January 8, 2009 Ken, Also look through our vending 101 section. There is a button at the top of the main forums for it but here is a link. There are about 4 threads there that deal with valuing a route. http://www.vendiscuss.com/forums/index.php?show=selected Welcome to the forum! Steve Link to comment Share on other sites More sharing options...
Beer980 Posted January 9, 2009 Share Posted January 9, 2009 They would need to provide some really iron clad proof of that income to warrant that price. It is 4 times the national average so without any reputable evidence the route is most likly over priced by the same ammount. If you divide it by 4 you are near the $30,000 area which is still quite a lot of money but close to $120 per machine on location. Some members would pay that much and some would not. It still sounds a little high but is it a route that you can step into if all thing are going good with it. I doubt they will be able to provide a good record of that amount of income for the machines that would satisify a bank loan. And no I would not jump on it if I did have 30K laying in the bank without a good hard look. So I would thank them and say good luck because it is not worth more then 30K to you. You could pay for brand new machines and get a bulk rate from a locator for them at that price. All you are saving by getting them at 30K from him is the time to locate and product to fill. Link to comment Share on other sites More sharing options...
alyssamma Posted January 9, 2009 Share Posted January 9, 2009 Ken, who is the seller if you don't mind me asking? This sounds like a scam run by a guy named Philip Vernon. Kevin Link to comment Share on other sites More sharing options...
KandMVending Posted January 9, 2009 Author Share Posted January 9, 2009 The initial information I received was from the business broker who is representing the seller. I just spoke to the seller and it is not 250 heads, but 250 machines that are mostly triples. So we are talking about at least 750 heads which makes much more sense. His price is including cost of machines and stands, $100 locator fee per site, candy, money in machines and 12% commission to the business broker. If anyone has any feedback on this I would appreciate it. Thanks. Link to comment Share on other sites More sharing options...
Quarter Master Posted January 9, 2009 Share Posted January 9, 2009 Through any type of broker, he is going to get his share.IMO-not money I would spend.$100 locator fee ? Who gets that and why?If the machines are producing income, why a locating fee? Right now there are too many questions you need to have answered.Another thing to consider is the time it will take to service these machines.Can you service 10 machines a day-5 days a week on a continous cycle?This is what 250 machines on a 5 week cycle will take. Link to comment Share on other sites More sharing options...
alyssamma Posted January 10, 2009 Share Posted January 10, 2009 Ken, like others here have told you...bail. Don't take this deal. Link to comment Share on other sites More sharing options...
antoniocinisi Posted January 10, 2009 Share Posted January 10, 2009 I agree with the others,this doesn`t sound right. why would he sell only part of his route? getting a loan for this much might also be a problem,ecspecially now. Link to comment Share on other sites More sharing options...
BluePlate Posted January 10, 2009 Share Posted January 10, 2009 When you get into something this size, I think it is not unusual to sign a no compete/non -disclosure agreement, so you may do some due diligence. I would begin by asking for a 10% sampling of locations for you to visit to see condition and type of machines. While not always the case "3 head" screams Vendstar. Also the owner should have a service record history and maybe even some schedule "C" tax returns. If he is justifying the price of a location with "locator fee" of $100, I would ask how he arrived at that number. Even the most expensive bulk locator is about $65 - $70 per location. I don't think it is a "normal" thing for a business broker to charge the buyer, it is usually a sellers cost. If the business broker is representing you, I would get my monies worth out of him, have him take some pictures of the locations. At least get him to buy you lunch! Also one other thing to consider in this economy. I have at 2 locations just fold on me, went to service the location, gone! No money, no machine, no nothing...... Consider the strength of the locations. Also, when a route this size changes hands - I would always expect to lose 2%-3% of your locations. You will have a % of your base just not like or want change, or they feel it's their opportunity to get rid of the machines they've been meaning to do anyways. You also did not mention if the locations are charity or comission based (this is a huge question). Good luck!! Keep us updated........ Link to comment Share on other sites More sharing options...
Beer980 Posted January 10, 2009 Share Posted January 10, 2009 Ok so now we are dealing with triples of unknown type. He is stating they are doing about $40 per machine per month. Now we are only double the national average for a triple. Still not totally beleivable but getting closer. So he should be netting in the $80,000 range for those machines. With all things being equal he is willing to cut his income from $320,000 down to $240,000. I would love service 10 machines a day for this kind of loot. I could still keep my day job I think. It sounds like a lot of flag waving going on. If everything is true then I still would not go over $40,000 for the route. Depending on the machine age, how soon will they need replacing? That is a good chunk of change to replace them all and the time to do it. Link to comment Share on other sites More sharing options...
alyssamma Posted January 10, 2009 Share Posted January 10, 2009 Again, this sounds exactly like a scam run by Philip Vernon. Find out if the machines are "custom". If so, its him. Kevin Link to comment Share on other sites More sharing options...
MountainMan Posted January 10, 2009 Share Posted January 10, 2009 I would not do this. It sounds like a scam to ma also. I can buy triples shipped to my door from xyz for 150 dollars. I can get them placed by Rob for around 50. Guaranteed to bring in XX dollars. If I had that kind of money, I would buy them and have Rob place them, or place them myself. I would also look into craigslist for existing routes. Skipping over the scam ads of course. As far as needing it right now, I would set aside 1/2 of allt hat money for a year of living and not worry about paying the bills! Link to comment Share on other sites More sharing options...
nepavend Posted January 12, 2009 Share Posted January 12, 2009 I agree, this sounds like a lot of talk, I will bet a pizza that he will balk at producing documents, and will probably disappear once you ask a few more questions. Treat this like a business purchase (which it is). You MUST see tax returns, location lists, a sampling of actual locations, an equipment inventory, audited financial statements (whenever they exist). Without documentation, you have no way to determine value and therefore must lowball your offer accordingly (i.e. cost of used equipment only), that is the best way to explain it. Link to comment Share on other sites More sharing options...
U-Turn Posted July 9, 2009 Share Posted July 9, 2009 I had one meeting and several phone conversations on purchasing 100 machines and having them located all from Phillip Vernon (vernon71@gmail.com) for a cost of $30,000 - $200 per "custom" machine and $100 to locate each machine. I originally found him on Craigslist on the DFW page. Here's one of his ads: established vending route (midcities) -------------------------------------------------------------------------------- Reply to: see below Date: 2009-06-30, 8:39AM CDT 100 vending machines established in midcities area sell part or all possible finance 214 436 6236 Location: midcities it's NOT ok to contact this poster with services or other commercial interests PostingID: 1246697714 http://dallas.craigslist.org/mdf/bfs/1246697714.html He says the 3 head machines will average $45 but $30 on the low end. It sounds so good but after reading these posts I'm shocked. What do we do now? Link to comment Share on other sites More sharing options...
Bravo Duck Posted July 9, 2009 Share Posted July 9, 2009 What do we do now? RUN AWAY! Link to comment Share on other sites More sharing options...
Jax Snacks Posted July 9, 2009 Share Posted July 9, 2009 RUN FAR FAR AWAY - NOW! Link to comment Share on other sites More sharing options...
vipergts Posted July 9, 2009 Share Posted July 9, 2009 Sounds expensive. There is a guy selling his route in Atlanta with about 800 locations. Although he says you should generate $8-10 average per location. I've talked to him a couple times about buying some machines, he's pretty stubborn. He's asking $20k for the route. He says he has about 400 machines in storage, but I'm not sure if those are included in that price. I'd love to buy this many machines. If it were in my area rather than an hour away, it would be a very hard decision for me. Link to comment Share on other sites More sharing options...
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