Looking at buying a route--Was I out of line here?

[Paraflier]

Hello all--

I am emailing a seller of a small route (2 soda, 3 snack) for the last couple days. one of the reasons I wanted to run the route with them was to find out from the location owners (not in front of the seller of course) if they were happy with the service. Just trying to feel out the location to see if they were looking to discontinue the service and--POOF-- I'm stuck with 5 machines w/o a place for them.

The seller responded with, "(Seller's Husband) is not comfortable, generally speaking, having a potential buyer quiz the location managers because he has worked hard to develop a relationship there and has an opinion about making a formal introduction only when there is a deal done for the sale. Keeping the locations and employess there happy would be up to the new owner, or they may be asked to leave through no fault of ours. We'll be in touch."

Was I out of line saying I planned to speak with the location owner to make sure they were continuing the service? It was already disclosed there were no contracts with the locations.

Any advice would be welcome.

[G-Vending]

Your trying to do what I should have when I bought my route.

You should be able to ask questions or walk away.

As far as contracts with locations I do not have any myself.

GOOD LUCK

[coinvestor]

I would not agree to let anyone talk to my customer, nor would I talk to someone elses while viewing a route for sale. When I look at a route for sale, I tell the seller that I will not ask any questions in the location. We go in and look at the location, I see what I need to, then go out and talk in the parking lot.

If the seller has been introducing every potential buyer from CL to the contact, I will have a much harder time taking over an account then if they never new it was for sale until I'm introduced. If you told me you were going to talk to the location contact, I would not even tell you where the locations are.

Just my thoughts.

JD

[IVEND11]

if he will not let you meet with them you may want to rethink this. We just took over a company that was in are area he was a small vendor nice guy but he never told anyone about it. In fact the guys that were working for him were told after we had paid for it. The largest account that has about 500 employees told us that we were not going to work them because the same guy had worked them for 10 years and it was are fault that he called us and wanted to sell. We had to kiss but for a long time. The sad thing was the vendor that was in there was a sorry vending company nasty machines high prices poor service.  Now the account is glad that we took over. And would not kick us out for anything but it could have been real bad because of the same thing that you are dealing with good luck

[antoniocinisi]

I dont think u were out of line but I understand the sellers point of view too.

[mxer518]

Through all of the routes I have purchased I have never talked to the managers until the deal was done, it can cause some serious damage to the account by talking to them before the deal is done. If you have any question to the stability of the account just insist that you be allowed to go with the seller several time to see how the account is being treated and you will be there to hear if there is anything that they have issues with.

[antoniocinisi]

but thats also giveing away the location and escalades the chances of the potential buyer to go in on his own.there has got to be another way??

[BluePlate]

Draft up some type of agreement in writing.  This is pretty common.  Have him pick one of the clients (his choice) and just tell them you are a potential investor.  Buying and selling businesses are a fact of life.  I do understand his worries, but if you can't get some type of piece of mind on locations - then the locations have no value, except the value of the machines.

[Paraflier]

Thanks for all the thoughts. I can see both sides. Picture this though--

You have a couple soda/snacks at a location. Your contact at the location wants to terminate the account. Instead of taking the time and effort to secure another location, you decide to offload the machines on some poor unsuspecting sucker... (me).

So I purchase the machines, and go for a service. That's when I'm 'reminded' to get the machines out. Bad news.

Again, thanks for the replies!

[Sparta_Automation]

I can understand your concern with this issue and there is no easy way around it.  One thing I would do as part of the purchase agreement from the old owner is to install a non-compete, no-contact for at least 12 months.  This would stop them from coming back after you have bought the route and reestablish their old relationship under a new company.

Just my .02

Travis

[mxer518]

Agreed, I can not stress enough how important a non compete is, I always insist for a minimum of 5 year.

[Paraflier]

Thanks, Travis. That sounds like a nice idea.....

But I think I really ruffled the sellers feathers by asking. "We'll be in touch", they said. I know what that means. "Ahhh!! This guy wants to know out location to try to take it from us!! Ignore! Ignore!!"

Lesson learned, I suppose.

So for future reference, all of you that have purchased placed machines....2 or 20. You are pretty much taking the sellers word that things are good to go in regards to the location? (I can understand once you take over an account and run it into the ground, you're going to get 86'd)

[coinvestor]

So for future reference, all of you that have purchased placed machines....2 or 20. You are pretty much taking the sellers word that things are good to go in regards to the location? (I can understand once you take over an account and run it into the ground, you're going to get 86'd)

Here is my opinion for buying small routes, and or a handful of locations. I think allot of this changes when you start looking at larger routes, or buying the actual business, or a well documented route which are rare when they are small part time businesses.

I don't take the sellers word for anything when buying a route (or locations). I go by what I know and what can be proven. If sales are X, then show me records. If you can't show me records, then I will assume that it does 25% less than the identical location I have across town or what an X employee location does. I will try to use the non resettable counters to support this. I assume that, unless a term contract is in place, the seller is within weeks of being replaced as there vendor.

People sell routes for a reason. Usually they have sold it mentally long before you get there and there service will reflect that. I assume that ALL the locations are not happy with the service they are getting. My intention is to acquire the location, immediately show a service improvement before anyone other than the contact knows that there has been a change in ownership. Within the first week I try to have all machines thoroughly cleaned, trouble changers and validators replaced, new stickers with contact info put on, revamp the snack selection, and have all machine lights in working order. This is usually how people at the location find out that there is a new vendor.

Buying a small poorly serviced route is gamble of 100% of your money. There is no way to make it fool proof. Plan for the worst, but shoot for the best. After several weeks you will have a good idea of who is happy and who is not.

FYI.... I have never lost any location that I acquired (knocking on wood).

JD

[ABCVending]

I was able to go out with these guys on this route.

Everything seemed legit to me, but what do I know, just a newbie.

I was unwilling to commit to buy before I look at another route this weekend - didn't expect them to be cool with the delay, noticed it got re-listed on CL.

Isn't losing locations always a concern when buying a route?

[Paraflier]

I was unwilling to commit to buy before I look at another route this weekend - didn't expect them to be cool with the delay, noticed it got re-listed on CL.

I think the fact that they really shut down when I brought up legitimate concerns, coupled with the fact there is no real evidence of sales, and throw in the gut feeling I have means I walk and keep my $ to spend another day. That's the nice part about vending. There will always be something top pick up. Just need to be patient.

Thanks everyone for reading and chipping in advice.

[mission vending]

Here is my opinion for buying small routes, and or a handful of locations. I think allot of this changes when you start looking at larger routes, or buying the actual business, or a well documented route which are rare when they are small part time businesses.

I don't take the sellers word for anything when buying a route (or locations). I go by what I know and what can be proven. If sales are X, then show me records. If you can't show me records, then I will assume that it does 25% less than the identical location I have across town or what an X employee location does. I will try to use the non resettable counters to support this. I assume that, unless a term contract is in place, the seller is within weeks of being replaced as there vendor.

People sell routes for a reason. Usually they have sold it mentally long before you get there and there service will reflect that. I assume that ALL the locations are not happy with the service they are getting. My intention is to acquire the location, immediately show a service improvement before anyone other than the contact knows that there has been a change in ownership. Within the first week I try to have all machines thoroughly cleaned, trouble changers and validators replaced, new stickers with contact info put on, revamp the snack selection, and have all machine lights in working order. This is usually how people at the location find out that there is a new vendor.

Buying a small poorly serviced route is gamble of 100% of your money. There is no way to make it fool proof. Plan for the worst, but shoot for the best. After several weeks you will have a good idea of who is happy and who is not.

FYI.... I have never lost any location that I acquired (knocking on wood).

JD

That's about how I handle it as well. I do try to do a ride along to see the locations. Offering a noncompete agreement before asking to ride along really helps. While doing the ride along I'm just a buddy hanging out with my friend helping him out for the day.

In any service industry you take the chance of losing accounts with new ownership, it's just part of the thrill of being a business owner. The glory of victory and the agony of defeat are yours and yours alone, just take your time and be careful.

[snack dude]

I do know if this will help but heres how I look at it. 5 years ago we took over or bought a vending buisness that was a little bigger than the one I already owned, It was grossing low to mid six figuares. The seller gave us all his financials without giving us the names and addresses of the accounts. for example location #1 location #2 and so on. And I did not blame him a bit. I wouldnt have done it either. So what I did was figuared out what percentage of buisness each location was. That way if someone got ticked off because of the change could the rest of the buisness survive without that account. turns out the largest account was only 15% of the gross buisness. I felt that it was a good risk so we made the deal. Then the former owner and myself went to every account and he introduced me as the new owner to the account and we went from there. We did lose two accounts that I felt was them just being unreasonable and to be honest did not really miss them. But if the largest account would have been 30% or above of the buisness I probably would have taken a harder look or a different tack in negotations. In my mind your then buying a location not a buisness. Just my opinion

[Mikey B]

I see your point, and I also see the sellers point.  When I first started in this business, I bought a route.  The seller showed me the books etc, and it would take roughly 9months to payoff my investment. it was 5 stops.  with in 30 days of acquiring the route, 3 of the locations dropped me. 3 weeks after I got the boot,  I saw the seller hitting those locations with product and new machines.

So basically in my opinion, he sold me a route, took the money and bought new machines and got 3 of his customers back from me.

So now if I buy a location, I ask the seller to sign a document stating they will not service that area for 12months.  They have looked at me like I was crazy, but when I explain my first route purchase experience, they are more than happy to sign.

[Poplady1]

That is awful.  Did you contact your local DA's offiice.  That sounds like a fraud charge in most States.  Vending is one of the most investigated businesses in our country.  DA's love a chance to look at a vendor that has pulled something like this because its a very easy "win" for their office.  Besides in this case that seller deserves to be sued in civil court or face a DA's questions. 

Blue Moose

[Mikey B]

I did call them, and they started an investigation. But all three locations said "we weren't happy with his service and the previous vendor decided to get back into the business."  Case closed.

[Paraflier]

Hope they let you borrow some boots to wade through that BS. That is terrible. I can see the reason for non compete / contact clauses in sales contracts.