How to Buy Machines(s) on Location

How to Buy Machines(s) on Location

Oftentimes, you may find someone advertising their vending machine available for sale “on location.” This can be an easy and exciting way to get started in the vending business as it’s a turn-key approach to get started.

There are several things to keep in mind when buying a machine on location.

1. Find out why they are selling the location. 

2. Get their asking price for the whole package.

3. Go visit the machines. Take pictures of them, the model numbers (you’ll need this later) and take note of the business it’s located in.

4. Ask the seller if they have a location agreement in place with the business. If they do, ask for a copy of it. 

5. Ask the seller if there is commission paid to the business involved, and what the terms are. This should be outlined in the agreement/contract if there is one.

6. if any of the machines are branded to Coca-Cola, Pepsi, or Dr. Pepper, check the inside and outside for asset tags that might show the machine is owned by the bottler. If it is, DO NOT factor that machine(s) value into the machine value portion of the equation below. It would be considered owned by the bottler and not the seller. (Coke or Pepsi most commonly)

   1. If you go forward with the sale, you will need to open up an account with that beverage distributor and have them transfer that machine to your account. If yo do not transfer it, the bottler may come and pick up the machine without notifying you and take all the product and money inside, leaving you with no recourse. This process is usually not a headache to complete and can be done in a week or two.

7. Ask the seller to provide sales revenue records for the last 12 months (more if they have it) for the machine(s).

   1. If they have credit card readers attached, ask to see the sales reports generated by the credit card reader system as it will track cash and credit card sales and is the most trustworthy source of revenue data.

8. Research what the machine(s) are worth by searching their make and model numbers on Facebook marketplace, ebay, craigslist, or even call distributors to ask what they are worth.

9. Now take down all of this information into one spot to do some calculations.

   1. If there is a vending agreement or contract in place, use the following method to calculate the total estimated value of the location

   2. Method to use: 50% of the gross annual sales + the market value of the machine(s)

   3. For example, a auto dealership has two machines that are making $10,000 a year and were worth $3000 total. So this would make the location worth $8,000 (50% of $10,000 + $3,000 machine value)

   4. If the seller does not have a location agreement in place, then you would reduce the location’s value significantly as the location could kick you out after taking over and you would be left paying a premium for a location that wants you out and you would no longer be making money, and have to move the machines at your own expense.

   5. In these cases, we value the location based on 15-25% of the annual sales. For our example above, the dealership would only be worth $1,500-$2,500 instead of $5,000. 

10. Now compare your calculated number from step 8 above and compare it to the number they are asking. Are they the same, or close? if not, try to negotiate.

    1. If the locations are not currently under contract but would be willing to go under contract, that may help with negotiating values.

11. If you go forward with the purchase of the machine(s) on location, work out the process to start the transfer of the credit card readers to your name as soon as possible. It can take up to a month for this process to occur sometimes. Without the seller’s help in transferring the credit card readers to you, they are useless and cannot be used again. The credit card servicing company will not transfer readers to you without approval from the previous owner.