Jnewbie Posted January 29, 2023 Share Posted January 29, 2023 I am extremely new to the Vending business. I work as a software engineer and am just looking for business opportunities as a side hustle. So I found a listing on BizBuySell for a vending location. I met with the guy at a location and he showed me the machines, but didn't open them or anything. He said he wants me to open a credit reader account so he can transfer the accounts over to me later next week after I agreed that I wanted both machines, along with a contract with the location. We agreed to meet next week and he says he'll bring a guy that can open the machines and who can provide all the financial data. My scammer radar is going off for these reasons: - When I asked him for the financials, he sent me a shady image of his computer screen with sales that didn't match the sales that he listed on the ad. It was around 1.5k short of sales for 2 machines. He claimed they were making $11,200 in the ad, but the numbers he showed were $9922 for the year - When I asked how I could verify the financials he got very defensive and said that if I didn't trust him that I'm "Not ready to get into this business" Which seems like a huge red flag - The ad says the card readers are Nyax, but they are actually Cantaloupe - He's telling me he wants me to pay for everything and then he will start the transfer of the machine readers, which takes 3-4 days. I can't imagine paying for everything and then having to wait 3 or 4 days to see if it actually transfers Overall, I'm just getting really weird vibes from him and he won't seem to provide detailed account financials. This has to be a scam right? Is there any way it could be legit? I'm supposed to meet with him next week to go over more details but I feel like it's going to be another strange meeting. Is there anything I can do to verify he's legit or just protect myself in general from losing money? Any help or thoughts is very much appreciated. Thank you! Link to comment Share on other sites More sharing options...
AZVendor Posted January 29, 2023 Share Posted January 29, 2023 First of all, you aren't giving us any details of the account and machines. What type of account is it and what models of machines are they? What is the asking price as well? Post a link to the ad so we can see how it's listed. Don't be afraid that anyone will try to buy it out from under you. Now on to your experience with it. I wouldn't trust this guy any further than I could throw him. The fact that he is the "seller" and didn't have keys to the machine and who would need to have someone else with keys let you into the machine is a sure sign of something fraudulent. He could be a broker selling it for someone else or he could have created a fake ad for machines he doesn't own, hoping to cash out before he has to prove he owns them. He must have some experience in the business to sound like he knows about vending. I suspect he's a broker for someone trying to sell the accounts. That means he gets a commission for selling it from the seller. Who knows what computer image he showed you and what/who it's from. The sales represented from the ad could be far different from the past sales in a past year or sales period. Sales numbers will never be consistent from one day or one year to the next, however. He is correct that it can take quite a while to transfer card reader accounts to a new owner, so that's not untrue. The claim that he's going to do it isn't correct if he's actually a broker - the owner of the machines has to do it. This could also add up to this being a USI/Federal vending machine distributor who is in business to sell machines. If the machines are from USI or Federal, then this is probably the case. Those distributors will place machines in locations without regard to actually viability and find a local operator they are friends with to run the machine while the distributor tries to sell the locations. The problem with this scenario is that the location is probably over-equipped with too many machines or new machines which are overkill for the location. This makes the location too expensive for the sales it generates, but remember, they are trying to move machines this way. They will run the account for a short time and extrapolate the sales to some time frame that they think will entice a buyer. I'll put money on either a broker or a distributor, and not a vending route owner. Link to comment Share on other sites More sharing options...
allen watson Posted January 29, 2023 Share Posted January 29, 2023 It’s a scam, move on Link to comment Share on other sites More sharing options...
Jnewbie Posted January 29, 2023 Author Share Posted January 29, 2023 5 hours ago, AZVendor said: First of all, you aren't giving us any details of the account and machines. What type of account is it and what models of machines are they? What is the asking price as well? Post a link to the ad so we can see how it's listed. Don't be afraid that anyone will try to buy it out from under you. Sorry, I guess I'm so new I don't know all these details yet. I have another meeting with him next week where I will get all this information. The account is at a non profit organization and there are 2 machines in the break room. One is a drink and the other one is a snack machine. They look like fairly new machines, but again, I'm so new I don't even know the brands. The asking price is 16.5k but I haven't agreed to pay the full amount yet. Here is the add: https://www.bizbuysell.com/Business-Opportunity/vending-route-for-sale/2030649/d=L2NhbGlmb3JuaWEvc2FuLWRpZWdvLWNvdW50eS92ZW5kaW5nLW1hY2hpbmUtYnVzaW5lc3Nlcy1mb3Itc2FsZS8= He told me he was going to take the ad down because I was interested, but it's still been up since he said that last week 5 hours ago, AZVendor said: Who knows what computer image he showed you and what/who it's from. The sales represented from the ad could be far different from the past sales in a past year or sales period. Sales numbers will never be consistent from one day or one year to the next, however. Yea it was a really cracked computer screen and it didn't even look like it was some the cantaloupe software (which I set up an account with). Just looks like a really weird screenshot of the drink and snack machine excel lines, the drink being the majority of the sales. 5 hours ago, AZVendor said: If the machines are from USI or Federal, then this is probably the case. Those distributors will place machines in locations without regard to actually viability and find a local operator they are friends with to run the machine while the distributor tries to sell the locations. Man, you sound like you know exactly what's going on. He sent me a link his supposed website and it was just a ton of new and refurbished machines for sale. Nothing like him actually running a vending business with routes. The location doesn't seem too bad and I guess I assume a breakroom for employees would be a good location. The building is fairly large but I should probably look up the amount of employees. I guess I just don't know how to verify that the financial information is correct next week. From what you're saying, it sounds like he is a distributor and I'll be meeting with his friend who owns the machines. Is it enough to watch him log into his Cantaloupe account and view the financials from there? I this new guy can open the machines, I guess that's proof that he owns them right? I wonder if there is a way I can verify that He wants all the money up front when the transfer starts. Isn't that insanely risky for me to pay for everything and wait for a transfer to complete? Oh, last thing I forgot to mention is that he says he lives in Orange County and he's selling it because he doesn't like commute to San Diego. But if what you're saying about his friend actually running it, that doesn't make any sense anyways. I'm so glad I found this forum. I appreciate your insight so much! Saving me a ton of money I bet. Link to comment Share on other sites More sharing options...
AngryChris Posted January 29, 2023 Share Posted January 29, 2023 The size of the building means nothing. Absolutely nothing, and not ever should you consider it for sales info. Buildings don't buy anything, people do. That's why you want to know how many employees work there. Transient traffic such as visitors coming and going can be very difficult to predict without lots of details so only count employees initially. Being a non profit also means nothing. What matters is if it is blue collar, white collar, other demographics, how many shifts, etc.. Having THAT information determines if it will be good or not. There are other factors too and there are always exceptions but that's how most of us predict sales, and that's how we could easily determine if this location justifies the sales listed. However, based off of a quick glance of the link you sent, I suggest you walk away and walk fast. This seller is asking for one year's gross sales (which can't be verified by him) plus equipment cost. That's asking too much for one single location that can't be verified. If it could be verified, it's still high in my opinion. 6 months gross plus equipment is fair. My gut tells me this is what azvendor was alluding to. It may not be a "scam" but a ripoff nonetheless. Link to comment Share on other sites More sharing options...
Jnewbie Posted January 29, 2023 Author Share Posted January 29, 2023 1 hour ago, AngryChris said: The size of the building means nothing. Absolutely nothing, and not ever should you consider it for sales info. Buildings don't buy anything, people do. That's why you want to know how many employees work there. Transient traffic such as visitors coming and going can be very difficult to predict without lots of details so only count employees initially. Being a non profit also means nothing. What matters is if it is blue collar, white collar, other demographics, how many shifts, etc.. I see, I wasn't aware of all this. Really appreciate the help on how to value a location. 1 hour ago, AngryChris said: However, based off of a quick glance of the link you sent, I suggest you walk away and walk fast. This seller is asking for one year's gross sales (which can't be verified by him) plus equipment cost. That's asking too much for one single location that can't be verified. If it could be verified, it's still high in my opinion. 6 months gross plus equipment is fair. My gut tells me this is what azvendor was alluding to. It may not be a "scam" but a ripoff nonetheless. So searching online for awhile, the only valuation I could find was gross sales + equipment. I thought that was how to value locations already in place, but I didn't know if was closer to 6 months gross. To me it seems like the best (maybe only?) way to get started in the vending business is to try to find your own location to put your own machine on. I wanted to get started a little quicker by buying an established location I guess. If he can't provide me the detailed financial information, I know I'll just have to pass. And even then, I guess it's too expensive of a price anyways. Thank you for your help! Link to comment Share on other sites More sharing options...
AZVendor Posted January 29, 2023 Share Posted January 29, 2023 The entire website it's advertised on is full of scams. The EBITDA is bogus as well based on that gross sales figure. He's suggesting that all of your costs are less than 1/2 of the sales. Not possible unless you charge more than anyone else does for the products. You don't list any of the category pricing either. That is a major factor. You should have at least taken photos of the machines so you could get them identified or given us a link to his website. Not taking the ad down is another lie from a liar. But this is not a good way for you to start so you need to just abandon the idea. There are two ways to get into vending. Find accounts that you place machines in yourself, or buy existing accounts and pay extra for them so that you have instant cash flow. There are pros and cons to each. The least expensive way is to do it all yourself and it's more satisfying. Either way is just as easy to fail in, it just depends on how much money you can afford to lose if it does fail. Link to comment Share on other sites More sharing options...
Jnewbie Posted January 29, 2023 Author Share Posted January 29, 2023 Great advice. Yeah, I agree. I should probably just walk away and consider this a learning lesson. I'm so new I just don't know what I'm doing yet. This forum is awesome. I will make sure to take everything you guys are saying into consideration when trying to get started with vending. Thanks so much and I'll keep this thread updated if I have any more information. Link to comment Share on other sites More sharing options...
AZVendor Posted January 29, 2023 Share Posted January 29, 2023 Just be sure to get all the information you can and take pics of anything you are considering so that we can advise you. Link to comment Share on other sites More sharing options...
Jnewbie Posted January 29, 2023 Author Share Posted January 29, 2023 1 hour ago, AZVendor said: Just be sure to get all the information you can and take pics of anything you are considering so that we can advise you. Will do, thanks! Link to comment Share on other sites More sharing options...
Jnewbie Posted January 29, 2023 Author Share Posted January 29, 2023 5 hours ago, AZVendor said: You should have at least taken photos of the machines so you could get them identified or given us a link to his website. Yeah, I'll definitely take pictures. By the way, he said this is his website: https://www.megavending.com/ , not sure if it's helpful to see the machines that are listed. Link to comment Share on other sites More sharing options...
AZVendor Posted January 30, 2023 Share Posted January 30, 2023 He is a distributor, but of a lot of questionable machines. He shows the Mercato line which is USI and he also shows the garbage Seaga line which is made of all imported parts (assembled in Minnesota but of imported parts.) He also sells used machines so there's no telling what he put in that account you looked at. Link to comment Share on other sites More sharing options...
tblake05 Posted January 30, 2023 Share Posted January 30, 2023 It sounds like an awful lot of money for unverified income. plus remember if the card readers are leased, they can be transferred, but you won’t own them, and their rate will be higher. Btdt. Link to comment Share on other sites More sharing options...
Jnewbie Posted January 30, 2023 Author Share Posted January 30, 2023 29 minutes ago, tblake05 said: It sounds like an awful lot of money for unverified income. plus remember if the card readers are leased, they can be transferred, but you won’t own them, and their rate will be higher. Btdt. Oh wow, I didn't know that either. Man, so much to learn. So glad I came here first before going through with anything. Really appreciate the advice. Link to comment Share on other sites More sharing options...
Jnewbie Posted January 30, 2023 Author Share Posted January 30, 2023 2 hours ago, AZVendor said: He is a distributor, but of a lot of questionable machines. He shows the Mercato line which is USI and he also shows the garbage Seaga line which is made of all imported parts (assembled in Minnesota but of imported parts.) He also sells used machines so there's no telling what he put in that account you looked at. Great points. Yeah I did see that Seaga was a bad brand. I'll have to confirm what kind of machines they are. One thing that's weird is that you have to sign in and have a badge to go into the break room (for employees). So I guess that might limit the foot traffic as opposed to it being in the lobby. Not sure if that's a big concern or not but thought I would mention it. Can't wait to share more information when I have it. Link to comment Share on other sites More sharing options...
Popular Post Jnewbie Posted January 31, 2023 Author Popular Post Share Posted January 31, 2023 Ok, got some more information today. Seems like you guys nailed everything! I needed to move the meeting back that was supposed to happen tomorrow and I asked for all the financial information from both machines in the meantime so I had some time to review by Friday. I also wanted the names of the machine, or at least pictures of them. He simply responded with "Can you put a deposit?". I said I was willing to, assuming he would send at least a year of financials and breakdown of the machines. That was this morning. Seems like he's ghosting me now lol. Thank you so much AZVendor , AngryChris, and allen watson I had no idea this forum existed before I started searching for a way into the vending business. This really opened my eyes to everything and I'm sure you guys saved me a ton of money. I'll let you guys know if I ever get a response from him, but I'm gonna just call this "business opportunity" a waste of time and maybe think of how I can get my own machine and location. So cool that this forum exists. 2 Link to comment Share on other sites More sharing options...
Jnewbie Posted January 31, 2023 Author Share Posted January 31, 2023 Thanks to you too tblake05! 1 Link to comment Share on other sites More sharing options...
Jnewbie Posted January 31, 2023 Author Share Posted January 31, 2023 Not sure if anyone is still interested, but he responded about the machines: - RV500 drink machine - 167 National snack machine Apparently is going to send me the financials today Link to comment Share on other sites More sharing options...
AngryChris Posted January 31, 2023 Share Posted January 31, 2023 1 hour ago, Jnewbie said: Not sure if anyone is still interested, but he responded about the machines: - RV500 drink machine - 167 National snack machine Apparently is going to send me the financials today I think I know what's going on here. The refurbisher/dealer is acting as a broker and selling the location for the seller. Everything could be legit but it's still heavily overpriced. It's also possible that the dealer is simply trying to hustle more money out of people by selling equipment on location. They are essentially selling equipment with a commission for the location equal to 12 months gross, which is too high. Regardless, if they have been so cold about providing financials upfront, I wouldn't buy. If someone tried to say I'm not ready to buy because I'm asking for financials, my rebuttal would be it sounds like they aren't ready to sell. Every professional company that's buying locations is asking for financials. Link to comment Share on other sites More sharing options...
Gizmo Vending Posted January 31, 2023 Share Posted January 31, 2023 Both are good machines, but I honestly would value these machines at $1000 for the Royal and $1500 for the 167 WITH nothing wrong with them. You are buying used equipment and not refurbished and the price should reflect that. He has FFE as $4800 and that’s what you would pay for the equipment if you bought it from an equipment distributor today. I say $2500 because they have already purchased equipment, claimed depreciation (section 179) and made money from this equipment as well as having a separate listing of inventory of $450.00. Now you want to look at the sales; having card readers, they can run reports and get you numbers from any date range you request. I would look at the last 30 days, last 6 months and last year. It only takes a few minutes to run said reports. The problem is they could easily take a good location that they make the sales they claim from ABC Company and tell you that these are the numbers to the location you are inquiring about. An excel spreadsheet can be altered in way possible. Things to look for: 1. Whoever owns this location, do they have other locations? If the answer to that is yes, then they are trying to dump off a poor performing location while trying to make a fortune doing it. I would ask the broker this question: “Does the seller have any other locations as well?” 2. How many people are at this location? They are claiming that sales are $11,200. That means there has to be a lot of people working there. Demographic would be blue collar warehouse type. 75 people with $2.50 20 oz bottles and $1.50 chips and $2.00 candy bars and you might get to that sales figure. MIGHT. A small amount of employees WILL NOT net that. Office type employees in a climate control environment will not do that kind of sales unless there are over a hundred. If you know anything about the company then call them out of the blue and get an employee count. Ask how many people work from home etc. Here is a link in an article to buy/sale a route: https://www.vendingconnection.com/how-to-buy-or-sell-a-vending-machine-business/ This isn’t set in stone and is merely the opinion of the author but is a good guideline of how much to buy/sale a route. Notice how they discuss a 70 percent of sales as a total and not sales plus equipment. Both pieces of equipment are probably 15-20 years old. The problem with buying 1 location is it is not a route and if you lose the location , you lose a lot of money vs. a route, if you lost one location in a route then you still have the other machines/locations. If you do decide to go with this please keep in mind at the end of the day it is your responsibility to buy this as cheap as possible. You owe it to yourself as well as your customers. Just like the ones trying to sale this, it is their goal and priority to sale it as much as possible. Link to comment Share on other sites More sharing options...
Gizmo Vending Posted January 31, 2023 Share Posted January 31, 2023 15 minutes ago, AngryChris said: If someone tried to say I'm not ready to buy because I'm asking for financials, my rebuttal would be it sounds like they aren't ready to sell. Exactly. Link to comment Share on other sites More sharing options...
AZVendor Posted February 1, 2023 Share Posted February 1, 2023 @Gizmo Vending It's "sell", not sale. Sale is not a verb. 😉 @Jnewbie I wouldn't recommend you buy this just because of the RVV500. That machine has had a history of problems and you don't know anything about machines. The 168 snack is okay but for a newbie, learning the programming is a mountain to climb. There are much simpler machines out there that you can buy used and they have much simpler programming for a new vendor. Link to comment Share on other sites More sharing options...
Jnewbie Posted February 8, 2023 Author Share Posted February 8, 2023 I really appreciate all the detailed advice @Gizmo Vending @AngryChris and of course @AZVendor. I looked into the machines a little bit and realized that it's not the best place to get started like you guys mentioned. Above all, the guy wouldn't even give me the financials no matter how much I asked haha. Total scam. Thanks for saving me from this guy. 1 Link to comment Share on other sites More sharing options...
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