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5 Myths About Buying a Vending Franchise Business

Sep 17, 2008
Many people enter into business opportunities, clinging to their pre-conceived notions, and this is especially true when it comes to vending machine franchises. Whether the thought is, "you can't make very much money when it's only a quarter at a time" or "there are already too many vending machines for a new one to make a profit," the truth about vending franchises may surprise you. To that end, here are five myths about buying a vending franchise business and plenty of data and evidence why there is very little truth, if any, behind them.

1. It takes money to make money

Entrepreneurs looking at franchises in general have a tendency to think that unless you are investing a great deal of money into your franchise, it cannot turn a decent profit, but that theory doesn't quite hold water. Yes, if all franchises made the same ratio of investment-to-profit, more expensive franchises would always make more money, and many of them do take in more dollars, but they also require much more income to continue to keep the operation going. The benefit of a smaller, work from home business is that the overhead is next to nothing, so much more of the income is strictly profit. Most vending franchises, like American Vending Systems for example, are affordably priced below the $20,000 mark, but the industry as a whole brings in $30bil every year in the United States.

2. You cannot make a living on vending machines

Skeptics will still say that though this work at home industry takes in such a huge figure every year, individual owners cannot earn enough money to make a decent living, in part because the income rolls in quarter-by-quarter. That may not look very impressive, yet consider that not all machines run on quarters, like DVDNow automated dvd rental machines, which cost $1 per rental per day. And second, with enough machines, individual vendors have been known to make around $70/hr. This may not be enough money to retire at 35 in a NY penthouse, but vending franchises can certainly keep you comfortable.

3. There is too much competition for everyone to succeed

Admittedly, it does seem counterintuitive, but the competition in this market actually helps. Multiple machines can often profit from being placed side-by-side in the same location, because it offers choice, something that most people love. When they see three machines offering different snack options, they feel more enticed to buy because they are more likely to find something they really like. Think about your own experience: is the tug stronger when there is one isolated vending machine, or three that clearly have a variety of products? Vending may be the one place where competition makes for better business.

4. It does not really matter what you put in the machine, so go with the off brand

The average buyer completely disagrees. If there is one thing that corporate America has succeeded at, it's convincing consumers that brand means everything, because given the choice between a handful of m&m's and a handful of the generic product without those happy little letters, most people will pick the m's every time. This is precisely why businesses like Vendstar make it a point to tell potential franchisees that they only use brand-name candies, nuts, and gums.

5. It doesn't take any effort to run a vending business

You can run nearly any business with no effort, but chances are you'll be running it right into the ground. The truth is, it does take hard work to run a vending business successfully. The machines do the hard work of selling the merchandise, but good franchisees have to be constantly on the lookout for the next great vending location, particularly for specialty machines like The Love Maine Lobster Claw Game, which will not turn as great a profit if you place it in the wrong location. Good franchisees also have to be disciplined with their income, always keeping an account for more machine purchases. They must also keep close watch on all their machines in order to keep them stocked. It doesn't take a rocket scientist, but it does take someone that can keep multiple plates spinning in different corners of town while maintaining focus on long-term goals.

The beauty of vending machines is that they provide wonderful business opportunities for a much lower cost than your average franchise, and whether a person wants to make it a full time job or just something to subsidize an existing income, vending is a solid way to go. You just have to ignore the myths surrounding it and make it work for you.
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