Aspiring entrepreneurs have been warned about the deceptive ease of running a vending machine franchise, after a major vending company announced its plan to offer vendor financing and a DIY package.
Jason Gehrke, director of the Franchise Advisory Centre, says people often view vending machine businesses as something that will generate a substantial income through little effort.
“They often fail to realise that a more significant amount of time is required in order to get an appropriate return on investment,” he says.
“Machines are not particularly cheap and to have enough income to replace your day job you’ve got to have a reasonable number of machines.”
“It’s a relatively competitive environment for locations for machines, and the time required to find an appropriate location… is certainly not to be underestimated.”
Gehrke points out vending machines are often located in business premises, which can be difficult to gain access to after-hours.
“If the machine is in an office’s staff canteen or kitchen area, you only have access to it during business hours,” he says.
“That makes it very difficult for someone who thinks they can keep their day job and then run the business on the side.”
Gehrke’s comments come on the back of an announcement by vending company AustVending, which, in a bid to attract franchisees, is offering vendor financing and a DIY package.
“Sometimes we have people coming to the business and they require finance because they’re not able to obtain it from banks without collateral,” franchisor Luis Nevares told Franchising.
“We’re sharing the risk and can finance up to 25% of the total package.”
The DIY package, meanwhile, is aimed at franchisees who are willing to spend up to $25,000.
This package provides franchisees with the machines, but it is up to the franchisees to find locations and fill the machines themselves.
The package is aimed at people who are “prepared to do the legwork” in order to pay less, Nevares said.
Here are two other vending franchises for you to consider:
The Gameking company was established in 1978 as an arcade game vendor. After seeing the future in chocolate vending machines, it embraced the emerging technology in 1998.
“Operating your own chocolate machines under the Gameking brand gives you a far greater ability to succeed… Chocolate machines are passive income earners,” Gameking says on its site.
“We allow you to be your own boss and be responsible for all aspects of your future income and lifestyle.”
“Coffee Ezy offers selected applicants the opportunity to establish their own coffee and hot beverage vending business using the Coffee Ezy franchise model,” the Coffee Ezy website says.
“There are no upfront fees, no staffing requirements, just the initial machine and ingredients acquisition costs to get started.”
“For motivated individuals who enjoy being ‘out there’ developing strong client relationships, and who are keen to grow their own business, a Coffee Ezy franchise presents a unique opportunity to fill a perceived gap in a high-growth industry.”