The things the vending industry doesn't want you to know!

During our 19 years in the vending business we have learnt the truth about vending – the hard way! When we started off in vending we had very little idea of how the industry works, what the advantages are, the downsides, the limitations and what was true – or not! This had little to do with how experienced in business we were or how inquisitive we were, it was all about what questions to ask, and as we soon discovered the vending companies were certainly not going to volunteer the information if we didn't ask the right questions. As a direct result of this limitation we made decisions that cost us our first vending business.

Over the years we have built up a reputation for being outspoken about the industry and many of it's failings and malpractices, we have also been willing to share these thoughts and experiences with those entering the industry for the first time so that they might avoid the pitfalls that we, and many others, become victim to every year.

How Much!
The most notorious area for misleading information is with quoted revenue figures. These are often massively over inflated unrealistic numbers to impress you, but most worryingly, to enable their over inflated prices to stack-up to offer a viable return. Ask for proof of their figures, don't be fooled by the odd few "Mega-sites" that can empty in a few days, vending is a numbers game which means that you have a wide selection of the good, the bad and the ugly, it is the average of ALL of these sites that represents your whole business. Also be aware of the useful vending phenomenon of "Honeymoons", these are the initial few fast empties in virgin sites due to the novelty and the site overdosing on Jelly Beans! I often refer to honeymoons as fool's gold; it looks like gold, feels like gold – but isn't gold! Just a nice short-term bonus before the site settles down to its normal usage. Ruthless companies will suggest that your sites will continually take honeymoon amounts of revenue; the figures to view are those the vendors are taking in 12 months not the first 12 days!

The site problem

The site is fundamental to your success or failure in vending and therefore is an area where much papering over happens. As you will have read elsewhere in this website, vending machines DO NOT earn money–SITES DO! No site equals no revenue. This single reason is responsible for the failure of more vending businesses than any other, yet it is one area that new operators pay the least attention to. Getting a new site is a tricky business; remember there are hundreds if not thousands of vending operators up and down the country competing for a finite number of sites. This state of affairs leads to the payment of excessive site commissions and ultimately "Poaching" where another operator moves in on your site and offers more commission than you are paying to win the site – result, you get evicted! It was this situation that wrecked my first vending business and why we created the Vending Revolution format that completely solved the site problem once and for all.

The commission question
The second part of the site problem to avoid is the commission question. Assuming you are fortunate enough to have a site the last thing you want to do is give away all your profit in site commission – you entered the vending industry to make exceptional profits for you NOT for the site! Those few vending companies that are prepared to acquire sites for their operators will usually charge you handsomely for the privilege, but because sites are very difficult for normal vending companies to acquire they often have to give away enormous amounts of YOUR gross revenue to the site to get the site without too much of a fight! Presently, it is not unusual to pay between £50 -£200 to get a single Tower vendor site, and to add insult to injury they will typically give away anywhere between 20%-40% of your revenue to get the site, we think 5% is enough!

The whole truth and nothing but the truth
Without doubt independent information on a company speaks many more volumes than any company can say about themselves, therefore, always make sure you speak to "independent" company franchisees or operators and don't be afraid to ask straight questions! With internet forums now joining hundreds of thousands of people with a common interest together it is becoming increasingly difficult for rogue companies to hide behind a wall of disgruntled customers without their names coming up at some point, I strongly suggest you join one or two of these UK Business Forums and find the Franchise and vending threads and see whose names keep popping up - for the wrong reasons!

Due to vending experience being invaluable in spotting the untruths, many vending companies will NOT deal with those already in the industry, as they know that they will be exposed, therefore be suspicious of companies who only deal with "new" entrants into the business!

Many unscrupulous companies have chequered backgrounds with complaints against them, check with their local Trading Standards office to see if they have received complaints about the company.

As a part of your due diligence, it is vital you check their trading history. This can be simply checked by visiting the 'Companies House' website and purchasing a copy of a companies accounts online, this will only cost you £1 - it could be the best Pound you ever spend! If the search does not find the target company on the Companies House register, this could indicate some serious trading issues. It is a legal requirement for companies to file accounts, and failure to do so is a serious offence.

At this point it is advisable to check to see if they have wound up or liquidated - voluntarily or involuntarily - a previous incarnation of their company, the chances are, they have. This will show up on a more comprehensive corporate 'Credit Check'. These available from many well known credit reference agencies such as Experian and Creditgate. This will cost around £20, and again this money well spent. The report will highlight not just indepth accounts but also an analysis of their financial standing, outstanding CCJ's and a credit rating. It will also inform of whether the directors have previously been a director of a liquidated company etc. Pay particular attention the date the company was incorporated, if it is recent and the company claim to have been trading successfully for many years... well, I think you can work it out from here!

The most dangerous of companies are the so called 'Phoenix' companies. Named after the Phoenix that rises from the ashes of its previous incarnation, these companies survive by promising the world, racking up huge debts and disgruntled customers and then sinking their company before they have filed accounts or been involuntarily wound up. These companies then re-appear almost seamlessly under a new similar name and carry on as if nothing has happened, yet they are a new legal entity and are free of the debts and responsibilities of the previous company, immoral and unethical but unfortunately, legal. My advice is check, and check again, and if in doubt, walk away.

We have always published a warning and check list to guide those considering entering the industry and help them avoid those companies that exist only to deceive and extract as much hard earned money from new operators who believe them.

The Acid Test
This is our classic 16 question check list, make sure you get a satisfactory answer to EVERY question …

1. How long have you been established in the vending industry?

2. Do you actually operate any of your own vendors? If yes, how many? Can we see your visit sheets?

3. Are your quoted revenue figures guaranteed? Can you prove them?

4. What will my vendors take after their "Honeymoon" period?

5. How many Franchised operators do you presently have operating your format? How long have they been established?

6. Can I independently speak to a selection of your operators?

7. Can you acquire new sites for me? If yes, how much do you charge per site? How long do you take to acquire the new sites?

8. How much site commission will I be paying the site? Is that percentage a minimum or a maximum, and is guaranteed NOT to increase?

9. What site security do I have from "site poachers" who are willing to pay a higher commission to the site than I pay?

10. Do I own the vendors I buy from you? Or, are they only on hire to me?

11. Do I receive a Contract that protects ME as well as you?

12. Have you or your company ever received a warning from or been prosecuted by trading standards?

13. Is there, or have you ever had legal action against you from one of your customers,operators or suppliers?

14. How long has your present company been registered, and has it previously traded under a previous name, have you ever wound up or liquidated a previous company?

15. Can I examine your company accounts for at least the past 3 years? VITAL - do not accept NO or an excuse to this important question that will reveal many facts about them.

16. Have you or your company, past or present, ever had any CCJ's issued against you/it?

Compare their answers or smoke screens, against the facts you have discovered during your due diligence searches, and remember if they mislead you just ONCE, can you believe anything they say?

We are proud of our credentials as industry whistle-blowers and will continue to expose those practises that exist to undermine a truly fantastic and profitable industry.

With everything you have read it would be understandable if you wanted to go nowhere near vending, the fact of the matter is that ALL businesses suffer from those unscrupulous companies that exist to exploit, vending is no better or worse, armed with satisfactory answers to the above questions and a bit of common sense you will avoid those companies. Vending is a truly fantastic business that continues to provide the stimulation and profits that I went into business to enjoy – and that's why we are STILL expanding our own vending business!

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