Mentor offered me a deal

[AJ519]

My vending mentor, the guy who sells me my machines and has been in the business a long time is offering to sell me an account at a casino, and 4 machines. He says to keep 2 on location and then swap them out instead of emptying the money on site. He states they make 400 per month and he would sell the account for about 4,000$. Does this sound realistic/reasonable? 

I'm hesitant because although I do trust him and like he says he has a whole business behind him, hes not just "joe schmoe from facebook", I feel like theres no recourse. I've only known him for a month, and while it seems like a bad idea to screw me over because imo a business relationship is worth more than a few bucks youd make from scamming someone, I'm still unsure.

With soda machines and snack machines you can tell how much money the machines make from the validators, but when it comes to coins, how do you guys recommend making sure youre not getting screwed? 

Edited April 3, 2023 by AJ519

[gumball guy]

16 minutes ago, AJ519 said:

My vending mentor, the guy who sells me my machines and has been in the business a long time is offering to sell me an account at a casino, and 4 machines. He says to keep 2 on location and then swap them out instead of emptying the money on site. He states they make 400 per month and he would sell the account for about 4,000$. Does this sound realistic/reasonable? 

I'm hesitant because although I do trust him and like he says he has a whole business behind him, hes not just "joe schmoe from facebook", I feel like theres no recourse. I've only known him for a month, and while it seems like a bad idea to screw me over because imo a business relationship is worth more than a few bucks youd make from scamming someone, I'm still unsure.

With soda machines and snack machines you can tell how much money the machines make from the validators, but when it comes to coins, how do you guys recommend making sure youre not getting screwed? 

What kind of machines are they? Singles, doubles, triples? Candy? Gum? $400.00 per month from two bulk vending machines is quite a bit but I assume that a casino has insane foot traffic so it could indeed do that much with the appropriate service cycle. He's the issue......Let's say it is indeed doing $400.00 per month and you pay 4k for it. Then out of the blue, let's say 5 months into the deal, the casino says we don't want the machines anymore. What then? You lose half of your investment with no recourse.

In years past when I would buy competing businesses, I would only pay asset value, meaning that I would only pay what the machines themselves were worth. I didn't care if it was a great location or not because in bulk vending there are no contracts like you see in full line vending. Bulk vending, especially these days. is very transient. I am constantly moving equipment and looking for better locations. I also lose locations consistently due to closure, management changes, ownership changes, space issues or they just plain don't want it anymore. For that reason I can't buy existing locations based on sales performance plus equipment value like you see them do in full line vending. If people didn't like my valuation method I just didn't buy it. Nine times out of ten though I would get a call back from them within a few month saying they would go ahead and take my offer. 

The only way verify his sales numbers is to ask the guy to let you come with him to service the machines for a couple of months to see for yourself. I would also ask to see him count/weigh the money and if he balks at that it would definitely raise some suspicions. I have know and done business with some of the greatest people and some of the worst people in this business over the last 20 years. One of the worst was a guy who customers absolutely loved but he would cheat people on commissions without a second thought. He also sold equipment and routes to unsuspecting newbies for ridiculous prices primarily by overstating sales figures. Morale of the story...do your due diligence any way you can and sadly you can't trust people you don't really know no matter how nice they seem.

Take your time, ask a lot of questions, ask to shadow him on his route and if he is pushy or non transparent you can always just walk away with your money in hand.

[AJ519]

9 minutes ago, gumball guy said:

What kind of machines are they? Singles, doubles, triples? Candy? Gum? $400.00 per month from two bulk vending machines is quite a bit but I assume that a casino has insane foot traffic so it could indeed do that much with the appropriate service cycle. He's the issue......Let's say it is indeed doing $400.00 per month and you pay 4k for it. Then out of the blue, let's say 5 months into the deal, the casino says we don't want the machines anymore. What then? You lose half of your investment with no recourse.

In years past when I would buy competing businesses, I would only pay asset value, meaning that I would only pay what the machines themselves were worth. I didn't care if it was a great location or not because in bulk vending there are no contracts like you see in full line vending. Bulk vending, especially these days. is very transient. I am constantly moving equipment and looking for better locations. I also lose locations consistently due to closure, management changes, ownership changes, space issues or they just plain don't want it anymore. For that reason I can't buy existing locations based on sales performance plus equipment value like you see them do in full line vending. If people didn't like my valuation method I just didn't buy it. Nine times out of ten though I would get a call back from them within a few month saying they would go ahead and take my offer. 

The only way verify his sales numbers is to ask the guy to let you come with him to service the machines for a couple of months to see for yourself. I would also ask to see him count/weigh the money and if he balks at that it would definitely raise some suspicions. I have know and done business with some of the greatest people and some of the worst people in this business over the last 20 years. One of the worst was a guy who customers absolutely loved but he would cheat people on commissions without a second thought. He also sold equipment and routes to unsuspecting newbies for ridiculous prices primarily by overstating sales figures. Morale of the story...do your due diligence any way you can and sadly you can't trust people you don't really know no matter how nice they seem.

Take your time, ask a lot of questions, ask to shadow him on his route and if he is pushy or non transparent you can always just walk away with your money in hand.

Im going to ask him what kind. Theyre 4 bins i believe. He says itll take about 140$ to fill them each up, 12 bags each. And theyre candy machines. 

 

The reason I dont put much stock into shadowing them on the route, is I bought a single head machine from a guy that was on location in a barber shop. He and his wife are like "yeah it doesnt do that well but it makes a little..." We open it and they claim its been 2 months since they checked it, and it has like 40 bucks in it. Ive had it on location for a month and NOT A SINGLE DAMN QUARTER in it. 

Edited April 3, 2023 by AJ519

[gumball guy]

2 minutes ago, AJ519 said:

Im going to ask him what kind. Theyre 4 bins i believe. He says itll take about 140$ to fill them each up, 12 bags each. And theyre candy machines. 

 

The reason I dont put much stock into shadowing them on the route, is I bought a single head machine from a guy that was on location in a barber shop. He and his wife are like "yeah it doesnt do that well but it makes a little..." We open it and they claim its been 2 months since they checked it, and it has like 40 bucks in it. Ive had it on location for a month and NOT A SINGLE DAMN QUARTER in it. 

Candy is getting expensive so that will push out your ROI even farther. Find out what brand of candy machine it is because if it's a junker like UTurn or even Vendesign it isn't woth the trouble in my opinion.  I wouldn't be surprised if the casino had a no gum policy and that stinks because gum is your best profit margin. Also you need to know if he is paying commission.

As far as shadowing that's why I said to do it for a couple of months. Sure, he could still pull an elaborate ruse but if he is actually pulling machines and replacing them with full ones that would be a lot of work to pull off. Again, based on what you have been telling me, you should be in no hurry so going with the guy for 2 or 3 months before shelling out 4k shouldn't be a big deal for either of you.

 

[AJ519]

1 minute ago, gumball guy said:

Candy is getting expensive so that will push out your ROI even farther. Find out what brand of candy machine it is because if it's a junker like UTurn or even Vendesign it isn't woth the trouble in my opinion.  I wouldn't be surprised if the casino had a no gum policy and that stinks because gum is your best profit margin. Also you need to know if he is paying commission.

As far as shadowing that's why I said to do it for a couple of months. Sure, he could still pull an elaborate ruse but if he is actually pulling machines and replacing them with full ones that would be a lot of work to pull off. Again, based on what you have been telling me, you should be in no hurry so going with the guy for 2 or 3 months before shelling out 4k shouldn't be a big deal for either of you.

 

Well my only concern is the site is an hour away from me, and I work a considerable amount as a healthcare provider and he is really busy running his routes so coordinating could be an issue. 

[gumball guy]

2 minutes ago, AJ519 said:

Well my only concern is the site is an hour away from me, and I work a considerable amount as a healthcare provider and he is really busy running his routes so coordinating could be an issue. 

Understood. I guess that it's fitting that the location is a casino because buying it will indeed be a gamble. Regardless of what you decide to do, good luck and keep us updated.

[AJ519]

20 minutes ago, gumball guy said:

Understood. I guess that it's fitting that the location is a casino because buying it will indeed be a gamble. Regardless of what you decide to do, good luck and keep us updated.

Okay I just asked him, its 4 8 bin machines. They look like these except theyre 4 on top 4 on bottom. 

[gumball guy]

1 hour ago, AJ519 said:

Okay I just asked him, its 4 8 bin machines. They look like these except theyre 4 on top 4 on bottom. 

You are talking about a Uturn Terminator. They are junk. Ugly, subpar components like coin mechs and chute doors and globes that have a tendency to fog up and become brittle over time. The reason he doesn't service the machine there is because it's a nightmare to do so. You literally have to disassemble the entire machine to get the money out of the bottom coin trays. These are big machines (for bulk vending) and if he is transporting them into the location full, they weigh at least 120lbs and are very awkward. He maybe grossing $300 to $400 per cycle but he's only netting 2-3 cents a turn on that type of candy. Even less when you factor in gas, insurance, your time etc. I personally wouldn't buy it especially if it's an hour away.

[AJ519]

7 minutes ago, gumball guy said:

You are talking about a Uturn Terminator. They are junk. Ugly, subpar components like coin mechs and chute doors and globes that have a tendency to fog up and become brittle over time. The reason he doesn't service the machine there is because it's a nightmare to do so. You literally have to disassemble the entire machine to get the money out of the bottom coin trays. These are big machines (for bulk vending) and if he is transporting them into the location full, they weigh at least 120lbs and are very awkward. He maybe grossing $300 to $400 per cycle but he's only netting 2-3 cents a turn on that type of candy. Even less when you factor in gas, insurance, your time etc. I personally wouldn't buy it especially if it's an hour away.

Ah thanks! Yeah i'm honestly not a fan of the plastic handles. He told me that some ppl with turn them backwards and break them, and the candy comes pouring out, then tries to sell me ones like that. If its not metal I don't really want it. And yeah they look like a real pain to service. Ive really been liking the triple head ones with the swinging panel in the back. SO easy. 

Edited April 3, 2023 by AJ519