Frequently I get calls asking if I’m interested in buying used vending machines. When asked what kind of machines they have, sometimes, the caller responds with “healthy vending machines.” The concept itself sounded strange since it’s the product you put in the machines which makes it healthy not the machines themselves. They go on to explain that they saw an ad for a healthy vending machine franchise, invested their money lost everything and now need to sell these machines. At first I didn’t pay any attention but after a number of similar phone calls I was curious to know exactly what was going on. The basic pitch is that these franchisers go on to solicit a healthy vending option to regular companies in need of vending equipment. At some point they package these locations and sell them as a franchise promising great returns and little work.
That in itself wouldn’t be so bad, except something doesn’t add up since people are calling trying to sell these machines at a 10th of the price. The first thing that blew me away was the cost of the equipment. People have told me they paid as high as $13,000 per machine which is double any brand new machine that I know of. Not to mention the fact these “healthy” machines are of third rate quality. Next was the fact that these people had no idea how the vending business works. Basically they are told that all you have to do is invest X amount of dollars and you will be virtually guaranteed a monthly income with minimum time spent in running the business. Finally giving up after dwindling sales, they decide to cut their losses and sell the equipment for whatever they can get.
Healthier Vending Options
About a month ago I was reviewing a vending service at a Nursing school in Orange County when I came across one of these machines…it looked ragged and half empty. When I asked the person I was meeting with what was the deal with this machine, she responded that at first they were sold on a healthy vending concept, it started out ok for a few weeks, but then people started demanding all the things they usually purchase from vending machines, i.e. chips, candies, soda, etc. She also noted that the prices in this machine were much higher than what people wanted to spend. Her students and employees bought less and less from this machine until the person making the deliveries stopped paying attention to the service and now it sat half empty for weeks. They ended up getting a regular vending company to service the staff and had this new vendor put in a mix of classic vending items as well as healthier options.
Shortly afterwards I had a meeting with a representative for the biggest seller of vending equipment in the US. We were discussing their new line of equipment when I remembered seeing these “healthy” machines and decided to ask her what she knew about these franchises. In a nutshell she confirmed to me what I had already suspected. She told me that these franchisors go to great lengths to advertise themselves and cloud the minds of inexperienced folks trying to start their own business. People get taken for 10’s of thousands of dollars and then are forced to try and salvage what they can. She told me that whenever she saw the healthy vending machines she almost always saw regular machines next to them. The companies cannot force out the “healthy” vendor, so they end up getting a normal vendor to satisfy their employee’s needs. At some point I would imagine the Franchisor starts blaming the Franchisee for the poor sales and blaming them for the demise of the business, when in fact they were doomed from the start.
No Short Cuts
If you are thinking about getting into the vending business get ready for long hours and little money. It takes time to establish your business. There are no short cuts and the last thing you want to do is depend on a third party to grow your business. Either you can make it work on your own or you can’t, it’s as simple as that.