Inflated
profit projections. These include
elaborate charts, showing the profit possible with a
certain number of sales per day, which grossly overstate
average industry statistics.
Location
services. The company’s
assistance usually ends once it finds an establishment
willing to have a vending machine on its premises, with
no consideration for the potential sales volume.
Training
programs. Industry sources
say that sales work is 50 percent of any operator’s
job and that success in the vending industry is based
on the operator’s ability to solicit locations
for his or her equipment. It is impossible to be trained
to operate successfully in one or two weeks.
"Good
deals" on machines. The
typical salespersons are usually independent agents
who buy vending machines from manufacturers for resale.
Better Business Bureaus across the country have received
complaints that machines purchased under these circumstances
jam, break down or give unsatisfactory service. Victims
often find that they have bought machines at two or
three times their actual value measured by the price
of comparable equipment.
"Discounts"
on merchandise. Many promoters
offer "bargains" on the merchandise to be
vended. Buyers tend to find that such merchandise cannot
compete in quality or price with merchandise sold by
experienced vending machine operators or in over-the-counter
retailing.
Repurchase
plans. Offers by promoters
to buy back inventory from investors who no longer want
to sell the products that are promised, but seldom delivered.
Usually the promoter has vanished without a trace by
the time an investor tries to exercise this option.
Restricted
territories. Promises of exclusive
territory free of competition may be in violation of
the antitrust laws.
Lease-back
arrangements. Occasionally
deals are made in which a purchaser leases the machines
and then hires the seller to service them, including
collecting the money. It is not unusual to find that
the cost of "servicing" is greater than the
money collected.
Guarantees.
Both written and oral guarantees are typical of the
unscrupulous vending machine promoter. Often, these
so-called guarantees are worthless because the sales
agency closes down and cannot be located and the manufacturer
will not honor them because the salesperson is an independent
agent.
Packaging
limitations. Some vending machine
offers are for machines that can accommodate only merchandise
that is packaged in a special way. This limits the buyer
from using other supplies or varying the product offering.
Promises
of success. The profit from
vending is in pennies or fractions of pennies per dollar
in sales and volume. Out of the money that is collected,
the operator often must pay a commission to the location
owner on whose property the machines are placed. There
also are licenses, insurance, machine maintenance and
parts, taxes, depreciation of equipment and all the
other normal and necessary business expenses with which
to contend.
